A coalition of Midwestern Catholic organizations called the Catholic Fraternal Alliance is creating a new family of mutual funds that will be offered through a powerful distribution network.
The charitable group has created the Catholic Alliance Funds, expected to be available in March, and will include an equity income, a large-cap growth and a capital appreciation fund. All three funds will invest only in companies that adhere to Catholic values, according to a draft prospectus filed with the SEC in December.
The alliance, which up until now sold individual life and annuity insurance to Catholics and Catholic institutions, is made up of three charitable Catholic organizations - Catholic Knights Financial Services, of Milwaukee, Wisc., the Catholic Order of Foresters, of Illinois and the Catholic Knights of America, of Missouri. The three are joint owners of Catholic Financial Services Organization, adviser and distributor to the funds.
The three funds are the first mutual fund products offered by the CFA. Allan Lorge, president and ceo of Catholic Alliance Funds and secretary and treasurer of the Catholic Knights Insurance Society, declined to discuss details about the funds because of SEC regulations. However, he said that CFA insurance products are marketed through individual agents, print advertising campaigns and membership magazines. There are 220,000 members of the CFA nationwide who belong to 800 local organizations. According to documents filed with the SEC, the group has sold $5 billion in life insurance and has $1 billion in assets under management. This puts the CFA among the top 15 percent of life insurers, the alliance says in the SEC filing.
The group also says it donates $7 million annually to its member organizations and other Catholic charities and parishes, although the group has no formal ties to the Catholic church.
The Catholic Alliance Funds will be sold differently than other existing Catholic funds. Two other Catholic funds, the Aquinas Funds, a family of four funds based in Dallas, and the Catholic Values Investment Trust, which is managed by Wright Investors' Service of Bridgeport, Conn., are sold without a sales load, while the Catholic Alliance Funds will be sold through licensed representatives with a four percent sales load.
Three different sub-advisers will be responsible for managing the three funds. Todd Investments Advisors of Louisville, Ky. will sub-advise the equity income fund, Peregrine Capital Management of Minneapolis will sub-advise the large-cap growth fund and Vantage Global Advisors of New York City will manage the capital appreciation fund.
The funds will not invest in companies whose activities are "inconsistent with core Catholic values," the funds investment policy says. Specifically, the funds will not invest in companies that have ties to abortion practices or in companies that generate more than five percent of their revenue from biological, chemical or nuclear weapons.
The fund will also not invest in companies "whose employment practices have been found to be substantially inconsistent with the dignity and primacy of the human person," SEC documents said.