Inspire Investing is the world’s largest provider of faith-based ETFs and creator of the globally recognized Inspire Impact Score™*, which investors worldwide use to measure the alignment of their investments according to Biblically Responsible Investing (BRI) principles. In this article, we will examine performance comparisons of Inspire’s ETFs to the S&P 500 for illustrative purposes of BRI performance (as defined by alignment with Inspire Impact Score™ methodology) versus “secular” markets.
The S&P 500 has long been the industry standard for gauging the health of the stock market. Naturally, Inspire ETF investors may compare their portfolios against the S&P 500 to assess their performance relative to the broader market. However, to make a fair comparison, it’s important for Inspire investors to understand the unique composition of the S&P 500 versus BRI portfolios.
According to their website, “The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.”1 Because the S&P 500 is also a market-cap-weighted index, the largest companies hold the greatest influence over the index’s performance. For instance, a small group of companies — often referred to as the “Magnificent 7” or “Mag 7,” which includes Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla — make up roughly 30%** of the index’s weight. This means that these companies alone drive about 30% of the S&P 500’s performance.
A recent study from LPL2 illustrates how this concentration skews the S&P 500’s performance. In the first half of the year, the Mag 7 gained 50.92%, lifting the S&P 500’s overall return to 18.12%. However, without these companies, the S&P 500’s return was just 8.32%. Even more telling is the performance of the S&P 500 Equal-Weighted Index, which returned only 4.60% over the same period.
For Inspire investors, this is a key point: The S&P 500’s heavy reliance on the Mag 7 distorts performance comparisons. Since these companies currently*** have a negative Inspire Impact Score™ due to their involvement in activities such as funding abortion-related travel, LGBT activism, pornography distribution, sexual exploitation, and the distribution of abortifacients, they are excluded from Inspire ETFs and, therefore, will not contribute to Inspire’s returns in the same way.
To provide further context, consider the Inspire 100 ETF (BIBL), a market-cap-weighted fund comprising 100 large U.S. companies that align with Inspire Impact Score™ methodology. Over the same 6-month period, BIBL returned 9.33%, outperforming the S&P 500 excluding the Mag 7 (8.32%) and the S&P 500 Equal-Weighted Index (4.60%), but falling short of the Mag 7-driven S&P 500 (18.12%).
Inspire also recently launched the Inspire 500 ETF (ticker PTL), which tracks the 500 largest U.S. companies with neutral or positive Inspire Impact Scores™. Although PTL’s performance for the first half of the year is not available due to its March inception, its inclusion in the Q3 figures below highlights the value of comparing BRI portfolios to indexes less influenced by the Mag 7.
As shown in the chart below, the performance landscape shifted in Q3. The Mag 7 returned just 1.25%, significantly lowering the S&P 500’s total return to 5.60%. In contrast, the S&P 500 excluding the Mag 7 returned 9.25%, while the S&P 500 Equal-Weighted Index delivered 10.45%. During this period, BIBL posted a solid 7.66% gain, and PTL gained 8.22%.
For Inspire investors, these deviations in performance are crucial to understanding how their portfolios stack up against the S&P 500. When the Mag 7 outperform the broader market — as they did in the first half of the year — Inspire portfolios may seem to underperform. However, when these companies underperform — as seen in Q3 — Inspire portfolios seem to outperform this index. This illustrates why it’s important for Inspire investors to take a more nuanced approach when comparing their performance to the S&P 500.
To address the originally posed question, Inspire’s periodic underperformance relative to the S&P 500 is largely inconsequential, given the S&P 500’s disproportionate exposure to companies in violation of BRI values, as determined by the Inspire Impact Score™ methodology.
As a final word of encouragement to Inspire investors, I leave you with this thought: “Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up” (Galatians 6:9). In essence, do not allow the recent dominance of the Mag 7 to deter your commitment to investing in alignment with BRI values. While seasons of relative “underperformance” are inevitable, our unwavering dedication to investing for the glory of God must remain steadfast.
