Papal Visit Philippines 2015 Special: Catholic Based Investing, Anyone?

This is a post, part of a series, to commemorate the Pope’s visit to the Philippines on January 15-19 2015.


Faith based investing, anyone?

Religion and religious leaders can influence their followers which businesses and investments to support, and which investments to avoid. Many often associate religious based investing with Shariah investments for Muslims. There are even Shariah-based stock market indices for Shariah compliant companies.

There are also many Catholics who try to abide by the teachings of the Catholic Church in their investment decisions. This is the reason for the existence of Catholicism compliant investment funds. These funds usually implement negative screens in order to avoid companies that have activities that go against the Church’s teachings. These funds may also choose to invest in companies that promotes or has a long track record of compliance with Catholic teachings.

A fund that promotes itself as compliant with Catholic teachings will normally avoid the companies which are involved in the following activities:

  • abortion
  • contraceptives/ birth control
  • embryonic stem cell research
  • pornography
  • weapons manufacturing and trading

But can these faith compliant funds actually steer clear of companies that performs business activities against religious teachings? This may be difficult for the following reasons:

  • Many companies do business with many other companies. A faith compliant company may be earning revenue from companies that are not compliant.
  • Many companies are invested in other companies (e.g. companies with pension funds). A faith compliant company may be financially associated with non-compliant companies.
  • People that manage or sit on the board of faith compliant companies may also be part of the management or board of non-compliant companies. After all, it is not the companies themselves that comply or not; it is the decision makers behind the companies that comply or not.
  • Investors define compliance differently. An religious investor may be ok with the company CEO having had an abortion or embryonic stem cell therapy, but this may not be ok with other religious investors.

Here are some examples of Mutual Funds that target the Catholic faithful:

Ave Maria Mutual Funds (US based funds) – according to the company’s  website,  – it seeks long-term capital appreciation from equity investments in companies that do not violate core values and teachings of the Roman Catholic Church.

LKCM Aquinas Funds (also US based) – according to the company’s website, – The investment guidelines set forth by the United States Conference of Catholic Bishops serve as a guide in the selection of securities for the LKCM Aquinas Funds. The LKCM Aquinas Funds follow these guidelines by using an approach that focuses on Catholic values screening of portfolio companies, proactive dialogue with those companies whose practices conflict with the guidelines, and potential exclusion of those companies that are unwilling to alter their practices over a reasonable period of time.

Some issues have been raised with regards to the compliance of the above funds.

If you are interested in investing in religious based funds, just be prepared to forgo investment gains in exchange for complying with your faith.





Published by

Finance, M.D.

Finance, M.D. is a practicing physician who dabbles in finance and investment. He has passed all three levels of the Chartered Financial Analyst (CFA) exams, all in his first attempts.

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