Values Over Value: The Rise of Ideological Investing

May 14

“Many investors say they want their money to reflect their worldview, even as performance remains paramount.”

Once a niche service, values-based investing has gone mainstream, just not the way ESG advocates envisioned. Today, investors increasingly demand portfolios that align with their personal or cultural beliefs. Many investors value being patriotic and aligning with religious beliefs or political ideology, rather than simply chasing broad environmental and sustainability scores.

Surveys show this impulse is nearly universal, especially among younger investors: a Morgan Stanley poll finds that 88% of global investors, and virtually all Gen Z and millennials, are interested in “sustainable” or purpose-driven strategies.

In the US, Charles Schwab reports that 73% of Americans now make financial decisions more rooted in personal values than two years ago, and 69% prioritize supporting causes they care about in their investing.

A Fragmented Landscape

“For centuries, investment choices have been shaped by creed and culture.”

This impulse is not new. Medieval Catholic bans on usury spawned values-driven finance, and Islamic law’s prohibition on interest still governs major Middle Eastern markets. In recent decades, ESG emerged as a consensus framework for letting personal ethics guide investment risk. But today’s trend is more fragmented.

In Europe and Asia, the appetite for “sustainable” funds is rising, but individual investors are also forming niche coalitions. Devout Catholic charities buy the S&P 500 Catholic Values ETF, which excludes companies at odds with Church doctrine-even warning that such exclusions may lead to underperformance. Faith-based funds, from Christian to Sharia-compliant, are growing in Japan and elsewhere. Even national pride has become a “value”: in oil-dependent regions, supporting traditional energy companies is seen as patriotic.

The Political Turn

“Conservative financiers have rushed to turn slogans into securities.”

The most visible wave has come from politics. In the US and some Western countries, backlash against “woke” corporate culture has spawned explicitly ideological funds. The Point Bridge America First ETF (“MAGA”) invests only in S&P 500 companies whose employees and PACs donate most to Republican candidates. Its sister fund, the Tidal God Bless America ETF (“YALL”), cherry-picks firms with patriotic or traditionalist records. Both boast strong returns and high profiles. Newer entrants, such as the American Conservative Values ETF (ACVF), claim to “boycott as many companies hostile to conservative values as possible”. According to ETF.com, “Anti-ESG” and “anti-woke” funds have proliferated, attracting investors seeking alternatives to broad ESG indices.

Values Versus Value

“These faith- or flag-based vehicles put ideology ahead of profit.”

These funds market themselves on values. The MAGA ETF’s homepage proclaims, “Bring Republican Investment Values to Life,” flipping the usual narrative that ESG is about value, not values. Senate critics of ESG distinguish between “value-based” ESG (using environmental criteria for profit) and “values-based” investing that ignores economic trade-offs. The Catholic ETF’s prospectus bluntly warns that excluding profitable stocks on moral grounds may result in underperformance. The MAGA fund similarly acknowledges it skirts top-performing S&P components to align with its creed. Ironically, early evidence suggests these funds have not fared badly: both MAGA and YALL have outperformed the S&P 500 since launch, though this may reflect sector bets more than ideology.

Global Echoes

“What unifies these portfolios is not an industry theme but a cultural one.”

Ideologically tinged funds are emerging globally. In Europe, asset managers offer “Patriot” or “Home Country” strategies to appeal to populist voters. In Asia, social movements-from climate activism in Australia to nationalism in parts of Europe-spur funds that target or shun industries accordingly. These trends are still small, but growing rapidly as social media and polarized politics amplify demand for tailored values investing.

The Advisor’s Dilemma

“Wealth firms that ignore this risk alienating business.”

For financial advisors, the rise of values-driven mandates is disorienting. Planning once focused on risk and return; now it must factor in clients’ beliefs as a core asset-allocation question.

A 2025 EY study warned that “wealth providers must understand clients’ sustainability goals if they’re to provide the investments-and the investment styles-they increasingly expect.” In practice, this means new questionnaires, deeper conversations, and sometimes new products. Many firms now explicitly ask clients about climate or cultural issues, using values questionnaires as conversation guides.

Customization and Compliance

“Advisors must juggle two master keys: financial analytics and personal values.”

US firms now routinely offer both “ESG” and “anti-ESG” models, with brokerages launching platforms for “patriot portfolios” or “faith-based solutions” alongside green funds. Some advisors steer values-oriented clients toward broad impact funds that still emphasize returns.

Language matters. Conservatives may recoil at “ESG” but respond to “performance of American-made companies,” while eco-minded clients prefer talk of “impact.”

Regulation is catching up: the SEC has proposed rules requiring brokers to document how client values influence recommendations. The EU may soon mandate values-based questionnaires and ongoing reporting on investment alignment.

Building Ideological Portfolios

“The mechanics of portfolio construction are changing.”

Values-driven strategies often require bespoke mixes. Negative screens may now exclude firms for cultural reasons, such as DEI policies or political contributions, rather than just environmental harm.

“screens may now exclude firms for cultural reasons, such as DEI policies or political contributions”

Positive screens shift too: for conservatives, “sustainable” might mean energy independence or gun-rights friendliness. Advisors assemble portfolios by pairing index funds with targeted SMAs or direct-stock holdings. This customization comes with trade-offs: narrower screening can reduce diversification and may hurt long-term performance. The Catholic ETF warns that shunning sectors like gambling or contraception could lead to underperformance. The MAGA fund’s founder admits outperformance is partly due to cutting companies with aggressive DEI initiatives.

The Tools of the Trade

“Direct-indexing platforms allow single investors to carve out custom equity baskets using algorithms.”

New data providers aggregate thousands of metrics-from carbon footprints to faith-based screening indices-enabling advisors to fine-tune portfolios. Broadridge and others now integrate such analytics into wealth portals, displaying “alignment scores” and AI-summarized reports on a client’s values alignment. Most experts recommend a hybrid approach: use algorithmic and off-the-shelf ESG data where it makes sense, but override models when a client’s core values demand it.

AI and the Personal Touch

“An AI agent cannot (and should not) eliminate the personal touch, but it can free advisors from the ever-growing routine legwork.”

Wealth management, long a bastion of spreadsheets and standardized models, now faces a technological reckoning. The sheer scale and complexity of aligning portfolios to each client’s unique values and risk profile has rendered the old cookie-cutter allocation models obsolete.

Artificial intelligence is emerging as a natural ally for values investing. Domain-specific AI agents, trained on finance data, could autonomously gather client preferences and filter investments to match exact criteria.

In theory, an AI agent would continuously rebalance a portfolio as client priorities or the world change. Proof-of-concept exists: Amazon’s “Wealth Management AI Advisor” parses company filings at superhuman speed, while asset managers have trialed GPT-4 agents on their research databases. Early adopters report a 40% boost in client satisfaction and a 30% cut in costs.

The Future of Values Investing

“In an era of ‘investment absolutism,’ the best hope may be technology that respects both ethics and expertise.”

The shift from broad ESG to targeted values portfolios is remaking the wealth industry. On one hand, it complicates advisors' lives, adding another layer of complexity and potential performance drag.

On the other hand, it opens new business opportunities: firms that credibly tailor strategies to niche values can build stronger client bonds. As markets polarize, the “one-size-fits-all” fund is losing its appeal. Whether one favours the left or the right, the message is clear: investor identity is now as important as investor returns.

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