One of the hottest new trends in ETFs is the socially responsible ETF domain. Socially responsible ETFs focus on selecting companies that are, well, socially responsible. While socially responsible ETFs typically include companies that focus on environmental consciousness, or being ‘green’, as well as avoiding tobacco and alcohol companies, there is a company and accompanying set of ETFs that takes this socially conscious view a step further: Timothy Plan.
What makes Timothy Plan ETFs unique is their exclusion of companies that do not adhere to Timothy Plan’s Christian values. For example, in addition to eschewing companies that are involved with the tobacco, alcohol, gambling or pornography industries, Timothy Plan ETFs additionally shun companies that engage in abortion, anti-family, or fail to “affirm the marriage covenant – a bond between a man and a woman.”
Two of the most recent ETF offerings by the company are the Timothy Plan US Large Cap Core ETF (TPLC) and the Timothy Plan High Dividend Stock ETF (TPHD), which launched on NYSE Arca today and both come with a 0.52% expense ratio. As the prospectus explains, “The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its net assets directly or indirectly in the securities included in the NASDAQ Victory US Large Cap Volatility Weighted BRI Index (the “Index”), an unmanaged, volatility weighted index.”
For the both TPLC and TPHD, the investment strategy is unique, and focuses principally on The NASDAQ Victory US Large Cap 500 Volatility Weighted Index, a volatility weighted index comprised of the 500 largest U.S. companies by market capitalization with positive earnings in each of the four most recent quarters.
At that point, the Index then further eliminates the companies that do not satisfy the eVALUEator proprietary Biblically Responsible Investing (“BRI”) screening criteria, Timothy Plan’s Christian values yardstick for assessing a company’s acceptability in the ETF.
The prospectus further explains, “The remaining stocks are weighted based on their daily standard deviation (volatility) of daily price changes over the last 180 trading days. Stocks with lower volatility receive a higher weighting and stocks with higher volatility receive a lower weighting.”
Like other ETFs, “The Index is reconstituted every March and September (based on information as of the prior month-end) and is adjusted to limit exposure to any particular sector to 25%.”
Timothy Plan’s mission is to launch products which are morally responsible in addition to offering returns and “not investing a penny into a company which violates its screens”.
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