OKLAHOMA CITY (ABP) — An Oklahoma investment company has unveiled what is believed to be the first Christian-themed line of exchange-traded funds in the United States.
FaithShares Trust in Oklahoma City announced two new products, FaithShares Baptist Values Fund and FaithShares Lutheran Values Fund, on Dec. 15. They join FaithShares' recently launched Catholic Values Fund, Christian Values Fund and Methodist Values Fund, completing the initial family of funds.
"We created these funds to meet the needs of investors who want to participate in the potential of the stock market, yet be good stewards of their money," said Thompson Phillips Jr., president of FaithShares.
Exchange-traded funds, or ETFs, have grown in popularity in recent years. They are similar to mutual funds, containing diversified investments in stocks and bonds that don't require a manager, making them cheaper than traditional stocks. Unlike mutual funds, however, they trade on exchanges just like stocks, making them easier to track.
The funds start with the 400 largest U.S. stocks, which are then filtered down to 100 by avoiding companies involved in morally objectionable ventures like gambling or pornography. While large investors can give millions of dollars to a money manager and ask that their funds be managed in keeping with certain beliefs, smaller investors are more limited in their ability to invest in only socially conscious stocks and funds.
While Phillips said he knows of one other faith-based ETF — a Dow Jones Islamic Market International Index Fund that invests in keeping with Islamic law — he believes his are the first explicitly Christian products of their kind.
Phillips said he and Garrett Stevens, CEO and portfolio manager, came up with the idea after experiencing first-hand the frustration of Christian organizations as they seek to invest funds over the long term without violating their constituents' consciences.
The individual funds are tailored around each denomination's beliefs and investment policies, so they vary by tradition.
The Baptist fund, for example, has zero-tolerance for companies involved in ventures related to abortion, beverage alcohol, gambling, producing military weapons, pornography and tobacco.
The Methodist fund allows stocks that derive no more than 10 percent of their business from alcohol sales, such as restaurants. The Lutheran fund allows companies that produce beer and wine but not distilled alcohol.
The Catholic fund excludes businesses that manufacture contraceptive products, use embryonic stem cells or fetal tissue for research or are involved in predatory lending controversies or have a pattern of gender discrimination or poor labor practices.
A generic Christian fund tailored to non-denominational churches and other denominations not specifically represented by other ETFs excludes "companies involved in: the direct participation or support of abortion; manufacture of alcoholic beverages; ownership of, or support of, gambling facilities, products or services; production or distribution of violent media; production, sale or distribution of pornography, use of embryonic stem cell or fetal tissue for research in a product; and manufacture, sale or distribution of tobacco products or supply of key elements to the tobacco industry."
"We did a great deal of research on the covenants of the various denominations in designing these funds," Stevens said.
In addition to offering guilt-free investing, FaithShares pledges to give 10 percent of its net income to a ministry associated with the respective denominations.
Currently the funds carry operating expenses higher than the average ETF but lower than faith-based mutual funds. Phillips told the Wall Street Journal that expenses will decrease as the funds' assets increase.
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Bob Allen is senior writer for Associated Baptist Press.