Facebook. Apple. Alphabet. What do those big tech companies have in common, besides being high-growth stocks?
They're all included in a new exchange-traded investment fund (ETF) that uses the U.S. Conference of Catholic Bishops' Socially Responsible Investing Guidelines to pick companies. That means it avoids companies involved with abortion, contraception, p*rnography, human cloning and weapons of mass destruction.
The ETF is the first from Dallas-based Faith Investor Services and is being managed by Knights of Columbus Asset Advisors, a Connecticut firm.
"Dallas is business-friendly and there are many people of faith in greater Texas so it was a no-brainer," said Faith Investor Services CEO Michael Skillman.
More than 80% percent of people living in Dallas-Fort Worth, often called the "buckle of the Bible Belt," identify as religious, according to the Pew Research Center.
Buying a basket of stocks through ETFs is a nearly $9 trillion global industry. But not many follow a faith-based investment philosophy.
Faith Investor Services, which has four full-time employees, wanted to bring faith-based investing beyond institutions. This is its first ETF but it hopes to launch a second one — focused on broader Christian values — by the end of the year.
Besides Facebook. Apple and Alphabet, Faith Investor Services' fund includes Microsoft, Alibaba, Visa, PayPal and Nvidia. The fund launched July 14 and is up to $21.4 million in assets.
The fund charges a 0.75% annual fee. That's on the more expensive end considering that the median fee for ETFs is 0.49%, according to Morningstar data. This means the fund is in the 81st percentile. However, if open-end funds are added into the mix, then the fund's expense ratio is more attractive — in the 39th percentile.
Environmental, social and governance (ESG) funds in the early 2000s sometimes required investors to give up a higher return on investment, but they've improved significantly, said Morningstar ESG analyst Alyssa Stankiewicz.
"I can't say every ESG fund is going to outperform the market, but it's not a clear tradeoff now, especially as choices increase," she said.
While Faith Investor Services is a new player, the Knights of Columbus has been around since the 1800s when the Catholic fraternal order was founded with a mission of charity. It has nine Catholic-oriented funds and well over 400 clients, said Anthony Minopoli, chief information officer of the Knights of Columbus Asset Advisors.
Its core business is money management for Catholic institutions, but it's in talks with Faith Investor Services about a family of three to four ETFs, he said.
As a seasoned financial analyst with a deep understanding of both the investment landscape and the intricate world of faith-based investing, I bring a wealth of expertise to shed light on the intriguing dynamics at play in the article you've shared.
The piece revolves around the introduction of a novel exchange-traded investment fund (ETF) by Faith Investor Services, a Dallas-based entity led by CEO Michael Skillman. The ETF, managed by Knights of Columbus Asset Advisors, distinguishes itself by adhering to the U.S. Conference of Catholic Bishops' Socially Responsible Investing Guidelines. These guidelines serve as a robust framework, excluding companies engaged in activities such as abortion, contraception, p*rnography, human cloning, and the production of weapons of mass destruction.
Now, let's delve into the concepts embedded in the article:
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Faith-Based Investing:
- Faith-based investing involves aligning investment decisions with religious or ethical principles. In this case, the fund follows the Socially Responsible Investing Guidelines of the U.S. Conference of Catholic Bishops.
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ETFs and Investment Landscape:
- Exchange-Traded Funds (ETFs) are investment funds traded on stock exchanges, providing exposure to a basket of assets. The article highlights that buying a basket of stocks through ETFs is a nearly $9 trillion global industry.
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Components of the Faith Investor Services ETF:
- The ETF includes prominent tech companies like Facebook, Apple, Alphabet (Google), Microsoft, Alibaba, Visa, PayPal, and Nvidia. These companies are known for their high-growth status and are presumably aligned with the Socially Responsible Investing Guidelines.
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Dallas as a Hub for Faith-Based Investing:
- The choice of Dallas as the base for Faith Investor Services is attributed to its business-friendly environment and the substantial religious population in the region. Over 80% of people in the Dallas-Fort Worth area identify as religious.
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Financial Metrics and Fees:
- The article touches upon the financial aspects, noting that the fund has accumulated $21.4 million in assets since its launch on July 14. It charges a 0.75% annual fee, which is comparatively higher than the median fee for ETFs (0.49%).
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Environmental, Social, and Governance (ESG) Funds:
- The article briefly discusses the historical context of ESG funds, noting that early versions sometimes required investors to sacrifice returns. However, the landscape has evolved, and ESG funds, including faith-based ones, are now seen as competitive investment options.
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Knights of Columbus and Catholic-Oriented Funds:
- The Knights of Columbus Asset Advisors, an established entity dating back to the 1800s, has a core business of managing funds for Catholic institutions. They have a significant presence with nine Catholic-oriented funds and over 400 clients.
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Future Plans for Faith Investor Services:
- Faith Investor Services expresses its intention to expand its offerings by launching a second ETF focused on broader Christian values by the end of the year. This reflects the company's strategic vision for growth in the faith-based investment market.
In conclusion, this innovative approach to faith-based investing, as demonstrated by Faith Investor Services and managed by Knights of Columbus Asset Advisors, provides a unique perspective on how financial markets are adapting to cater to diverse ethical considerations while seeking profitable returns.
