Does God Have a Place in Your Portfolio?

A growing number of ETFs and mutual funds attempt to appeal to religious investors

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What’s God got to do with investing? Increasingly, quite a bit.

Last winter, Oklahoma City-based asset management firm FaithShares Advisors L.L.C. unveiled the first Christian exchange-traded funds (ETFs). These newly fashioned investment vehicles screen out companies that engage in businesses that Christians might find objectionable, such as alcohol, tobacco, and weaponry. They may also take into account a company’s treatment of its employees, its environmental policies, and corporate governance issues. “There’s a tug-of-war where investors want to make money but they want to avoid sin stocks,” says Thompson Phillips Jr., president of FaithShares. Simply put, a growing number of investors want to reap returns and make a difference.

FaithShares is hoping to attract investors who want to build wealth while remaining true to their denominational beliefs. The company hit the market in December with five ETFs: Baptist Values (FZB), Catholic Values (FCV), Christian Values (FOC), Lutheran Values (FKL), and Methodist Values (FMV). Those funds are joined by the first Muslim ETF, Javelin Exchange Traded Funds (JETS) DJ Islamic Market International Index (JVS), launched in July 2009 by Javelin Investment Management. According to research firm Morningstar, there are now more than 80 faith-based mutual funds and six ETFs. Over the last decade, assets in those funds have grown from less than $12 billion to more than $30 billion.

The trend is clear. The question is whether the movement toward mixing religious commitment and investing will take place among African Americans, who are more religious than the American public as a whole. A 2007 Pew Forum U.S. Religious Landscape survey found that nearly 80% of African Americans say that religion is “very important” to them, versus 56% of all U.S. adults.

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  • Christian Broker

    I’ve looked at these funds and NONE of them “screen” like the traditional SRI funds. Smoke and mirrors. Only a handful of “religious funds” screen for Christian values — Ave Maria, Eventide and Timothy Plan funds are about the only one’s I have found to do what they claim. Sheryl Nance-Nash must not have done much reseach on this article, and that’s too bad.

  • Kim

    When I am investing this is somewhat an important characteristics, this is why I have not invested in a company like Altiria, but it is not my main reason. It is important to find companies which have good moral values, but also are helping your portfolio grow.

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