Christian financial advisors and investors looking to diversify an investment portfolio can consider a biblically responsible ETF investment strategy that seeks out the most attractive stocks meeting Christian principles and criteria.
On the recent webcast (will be available on demand for CE Credit), Gotta Have Faith: A Biblically Responsible Investment Strategy, Matthew Watson, Portfolio Manager for James Investment Research, pointed out that there is increasing demand among investors choosing to align their investment strategies with their core values.
For instance, socially responsible investment assets in the U.S. have expanded from under $1 trillion back in 1995 to over $8 trillion in 2016.
Mike McGraw, Director of Marketing for James Investment Research, argued that the increased awareness of socially responsible investment opportunities may also raise demand for the subset of biblically responsible investing. According to the Christian Investment Forum, 78% of the U.S. population identifies as Christian. Early adopters of biblically responsible investing have already funneled $1.5 trillion into this investment them, and it is projected that the market could grow to $8.4 trillion.
McGraw also looked to a recent Charles Schwab 2017 ETF investor study as an indicator of rising demand for socially responsible investments and related biblically responsible investment strategies. According to the recent Charles Schwab survey, 42% of clients revealed they would prefer a SRI strategy that is tailored to their values. Around 48% of respondents showed it is important to invest in socially responsible funds because the strategies are aligned with their beliefs.
A Way to Access a Biblically Responsible Investment Strategy
“You and your clients live by biblical principles. In the past, it has been difficult to apply those principles to your investing philosophy. That’s about to change,” Watson said.
Investors interested in gaining targeted exposure to a biblically responsible investment strategy can look to the James Biblically Responsible Investment ETF (Cboe: JBRI). JBRI tries to reflect the performance of the James Biblically Responsible Investment Index, which is comprised of large and mid-capitalization U.S. stocks of biblically responsible issuers.
The rules-based indexing methodology screens out or excludes companies engaged in activities that are objectionable from a biblical perspective, including abortion; entertainment companies with products or practices that promote sexually graphic, violent, profane material; glorify the use of drugs and alcohol; or create propaganda or content intended to undermine positive family values parents are trying to instill in their children; pornography; companies with products or practices that promote gay, lesbian, bisexual, transgender/transsexual, or questioning lifestyles, including through advertisements or marketing campaigns targeted to those with such lifestyles; alcohol; companies that use methods to support terrorist organizations, undermine human rights, undermine workers’ rights, or persecute Christians; tobacco; and gambling.
Watson also added that the indexing methodology incorporates fundamental screens to help enhance potential returns so that potential investors would not have to sacrifice performance to achieve their investment goals. At James Investment, they employ a rating system that incorporates relative value, relative strength and profitability when selecting component holdings. The portfolio is then equally weighted.
Investors seeking to use BRI ETF’s in a portfolio can utilize it in the socially responsible sleeve for U.S. equities, as part of a core u.s. large- or mid-cap exposure and utilize it for smart beta exposure to U.S. equities to achieve competitive performance.
“Use JBRI to align your investing with your principles,” Watson said. “Invest confidently knowing JBRI follows established investing principles rather than market whims. JBRI strives to demonstrate that investing biblically doesn’t mean sacrificing performance.”