Today, there are 50 faith-based mutual funds with $17 billion in assets, up from just a handful of funds with $500 million in assets ten years ago, according to Chicago-based Morningstar Inc.
“Probably the fastest-growing subset of socially responsible funds is religious mutual funds,” says Morningstar analyst David Kathman. “These funds won’t necessarily perform better than their mainstream peers. But they can give peace of mind to those who prefer not to own investments that conflict with their religious beliefs.”
Faith-based funds are not all alike. Companies that support abortion and gay causes, for example, are objectionable to evangelical Christians and Catholics. Muslims, who are forbidden by the Koran to earn interest, won’t invest in financial companies, or in companies with a lot of debt or in bonds. And they avoid companies that deal with pork. Sorry Oscar Mayer.
Fair enough. But what caught my eye was the dramatic differences between the Christian and the Islamic funds...
Unlike most other faith-based funds, The Ave Maria Fund Group, a Catholic values investment company, will invest in gambling, alcohol and arms and defense stocks. But abortion and gay rights are off limits. Ave Maria has five funds with $550 million in assets.
George Schwartz, president of Schwartz Investment Counsel, Bloomfield Hills, Mich., the investment advisor of the Ave Marie funds, said that gambling and alcohol are venial sins, not mortal sins. “Alcohol is used in the sacraments of the Mass," he stressed. "There is a Catholic doctrine for just wars and self-defense. Defense and tobacco are not anti-Catholic.”
The Roman Catholic Church does not endorse the fund group. But the fund group’s Catholic advisory board includes Cardinal Adam Joseph Maida of Detroit, Schwartz says. “We don’t try to be all things to all people. We are a fund for conservative Catholics. We don’t invest in abortion, pornography-related companies or companies that contribute to Planned Parenthood.”
That's an investment policy for you: War and booze good. Condom and titty-mag bad. I feel holier already.
Looking at the underlying investments in the funds is also instructive. An Evangelical Christian fund invests in ExxonMobil and Murphy Oil; an Islamic fund invests in Apple and Hewlett-Packard.
So Evangelical Christians profit when oil rises; Muslims gain when high tech prospers. Oil prices are now nearly quadruple what they were in Clinton's second term. Evangelicals win!
No wonder a oil-steeped Texan, bolstered by southern evangelicals, invaded Iraq — and why Iran is such a strong contender for invasion. It was simply to get the price up. Faith-based investing is just another minor but real tributary of the polluted river of Follow-the-Money.