top of page

A Review Of Our Firm's Investment Performance

Updated: Nov 12, 2020

New research from Morningstar summarizes what clients believe is important when working with an advisor. The research looked at 15 possible factors and asked both clients and advisors to rank each factor.

Ranked #1 by clients was "Helps Me Achieve My Financial Goals". #4 was "Can Help Me Maximize My Returns".

Since those attributes are highly correlated, it's important to understand how the investments we select for our clients have performed. Below is a performance summary of each fund we use in client portfolios.


Our data provider, Morningstar, compares a fund's rate of return against two different sets of data. First, funds can be compared against an index such as the Dow Jones Industrial Average or the S&P 500, aka benchmarks. This is a test of how a fund did compared to "the market".

It is very difficult for a fund manager to beat an index with consistency. Small deviations in return are expected, but in general with index funds, investors get what the market gives.

The second comparison for funds analyzes how well a particular fund did in comparison to its peers. For example, a U.S. large-company growth fund can be compared to other U.S. large-company growth funds. This is known as a "category" comparison.

The way to interpret the trailing rates of return below is under each fund listed in green are return metrics indicating how far ahead or behind the fund is compared to its category and benchmark. A positive number means the fund is outperforming. A negative number means the fund is underperforming.

All data represented below is as of 11/10/2020 and taken from Morningstar Advisor Workstation.






First and foremost, whatever you take away from the rate of return data, don't assume that any trends you're currently seeing will persist in the future. It's too easy to conflate the present with tomorrow. Other than stocks generally outperform bonds over long periods of time, we shouldn't assume anything.

In general, sustainability-themed funds outperformed both their peers and their benchmarks. In 11 of 14 year-to-date cases, or 79% of the time, sustainable funds outperformed their benchmarks. The average year-to-date outperformance of sustainable funds we use compared to their benchmarks is 11.86%. Bear in mind, I'm using a simple average as opposed to a weighted average. In addition, the outperformance of our clean energy ETF is highly skewing the average. Last, the benchmark for our global Impact Shares ETF is actually a U.S. based benchmark (according to Morningstar). All of these factors make the average outperformance seem better than what it actually is.

On the negative side, 3 out of 14 sustainable themed funds, or 21%, underperformed year-to-date. The average underperformance is -2.94%. I'm disappointed in how our chosen mid-cap funds performed. All I can say is that after a quick review, it appears that the two funds we use tend to spill over into the large-cap and small-cap buckets. This affects performance against the index, but I'm not sure it also explains underperformance against peers.

More long term, such as the 3-yr and 5-yr rates of return, sustainable funds are within a percentage point or so of their benchmarks, on average. This can be explained by a general underweight in energy holdings as well as resiliency across their supply chains during difficult economic times such as March & April of this year as well as the 4th quarter of 2018.

If you're a client at the firm, you've likely heard me drone on about the virtues of indexing as well as sustainable corporations. I'm not saying we're the best portfolio game in town, but it's likely you've done better than your friends.

If you are a friend of the firm but haven't committed to hiring us yet, I encourage you to be honest with yourself about your portfolio and your own capabilities. Are you getting the returns we are? Chances are, your investments are represented by the "category", or peer, numbers above.

You might not have hired us yet because you're afraid of the perception of giving up control. While I would agree hiring a financial advisor is very much a roll of the dice when it comes to investing, I'd like you to know building portfolios is a collaborative process you can very much be involved in. Hopefully, this fact removes at least some of the fear of bringing in a pro to help out.

One last motivation; the average outperformance this year of the funds we use against their peers, i.e., you, is 1.83%. Think about this, if you could've outperformed during this Corona Virus pandemic, gotten organized with a FINANCIAL PLAN, and removed yourself from having to spend time managing your investments, do you think you'd feel better or worse than you currently do?

We all have reduced mental bandwidth right now. Knowing your investments are doing the best they possibly can and that your plan is on track can remove a big chunk of stress.

Give us a call or shoot us a message through our site if you're open to a discussion about how your investments performed and how we might be able to improve upon your results. We'd love to hear from you and work towards rethinking your portfolio.


bottom of page