If your faith prevents you from investing in certain securities, you can invest in faith-based exchange traded funds (ETFs) and sleep well at night, at least from a conscience point of view. What makes these funds unique for followers of different faiths?
FaithShares Advisors LLC was the first and remains the only provider of faith-based ETFs, reports ETF Daily News. To date, they offer five different funds that “screen out “sin” stocks, such as those related to gambling or pornography.” [Faith-Based Mutual Funds.]
The five funds are the FaithShares Baptist Values Fund (NYSEArca: FZB); Catholic Values Fund (NYSEArca: FCV); Christian Values Fund (NYSEArca: FOC); Lutheran Values Fund (NYSEArca: FKL) and Methodist Values Fund (NYSEArca: FMV). In aggregate, the funds have $9 million under management and are committed to donating 10% of net income to a charity or ministry of choice.
According to a report by Standard & Poor’s, these funds are too expensive and fail to differentiate themselves from one another. The funds have an expense ratio of 0.87 percent, which is much higher than the average ETF ratio of 0.2 to 0.3 percent. In addition, Kenneth M. Leon of Standard and Poor’s wrote, “Regarding the top 20 equity holdings, there is really not a lot of variation among the FaithShares ETFs.” [Pax World’s Sustainable Investing Approach.]
Garret Stevens, CEO of FaithShares, countered that the point of having multiple faith-based ETFs is not to have mutually exclusive funds. It is the small differences that help an investor make a choice. For example, the Baptist Fund screens out alcohol, but the Catholic Fund does not, even though they both hold Cummins Inc. since they make good engines.
FaithShares Baptist Values Fund (NYSEArca: FZB) The FaithShares Baptist Values Fund investment objective is to track the performance, before fees and expenses, of the FaithShares Baptist Values Index, a custom index by FTSE/KLD.