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March 30, 2005 at 07:00 PM
March 24, 2005 — Easter Sunday represents one of the holiest days of the year for observant Christians. Churches around the country report much higher attendance for services on Easter than for any other Sunday in the year.
Even as many Americans who identify themselves as Christian neglect their weekly churchgoing obligations, they are finding other ways to express their faith. One way is through their investments.
“People are learning that it really does matter where you invest your money,” says Art Ally, president of The Timothy Plan family of mutual funds, which screen out companies that do not follow biblical precepts.
The Timothy funds are among a growing number of funds that use religious principals to select investments. Such funds are proving a popular choice among some investors. “Our assets are growing faster than the overall industry,” says Ally. “We understand why. Just look at all the corporate scandals that have broken in recent years. We never invested in any of those companies.”
“We have seen studies that suggest that 56% of people incorporate their moral principles into their investing decisions,” says Bob Leech, president of the Presbyterian Church U.S.A. Foundation, which runs several mutual funds under the New Covenant name. “We serve those people.”
Here are profiles of three mutual funds that use religious teachings as an underpinning of their investment process.
Ave Maria Catholic Values Fund (AVEMX)
The “values” in the name of this fund is a play on words, according to its president, George Schwartz.
“The Ave Maria Catholic Values fund is a value-oriented fund. It is a value fund in its investment outlook, but we also screen according to several parameters set up for us by a board made up of Catholic lay professionals, incorporating Catholic values,” explains Schwartz.
Specifically, this means the fund never invests in companies involved in abortion or pornography, nor does it invest in any company that contributes to Planned Parenthood. The fund also screens out those companies that offer non-marital partner benefits.
“These screens eliminate about 400 companies from the Russell 3000,” says Schwartz. “Then we look for companies that are selling for less than our estimate of their intrinsic value. We keep a well-diversified portfolio, across all capitalizations and in 16 different industries.”
The fund currently has assets of $250 million, up from $144 million in assets under management at the end of 2003. Since its inception in May of 2001 through the end of February, 2005, the fund has put up an average annual gain of 11.9%. It is a no-load fund with a minimum initial investment of $1,000 and an annual expense ratio of 1.5%, in line with peers. The fund has a 4-Star ranking from Standard & Poor’s.
“Our most recent purchases include the largest of the large caps and also a tiny micro-cap,” says Schwartz. “ExxonMobil (XOM, NYSE) is the biggest company in the world, and is in the portfolio. Input/Output Inc. (IO, NYSE), another holding, has a market cap of less than $200 million. Lots of large-cap stocks pass our screens. We have positions in Caterpillar (CAT, NYSE), 3M (MMM, NYSE), and Automatic Data Processing (ADP, NYSE).”
He says the fund pays no mind to sector weightings.
