Faith-based mutual funds have experienced significant growth in a short amount of time, increasing from $500 million in 1997, to approximately $17.5 billion today, according to McClatchy-Tribune Information Services.
Faith-based investing, also called morally responsible investing (MRI), has three main funds: Christian funds, Catholic funds and Islamic funds. Each of these funds monitor what firms and companies do business with, screening any that engage in activities that contradict their beliefs and morals.
MRIs are a division of socially responsible investing (SRI), which accounts for $2.2 trillion in assets. Despite their similarities, SRIs are sensitive to general social issues like environmentalism and human rights, while MRIs are grounded in religious interpretations. Because of the additional screening, faith-based mutual funds and SRIs are more expensive, but have the potential for high returns.
The Islamic Amana Income Fund currently has over $436 million in assets, gaining 25% in the past year, tripling gains on the S&P 500 Index. In addition, Catholic Ave Maria Mutual Fund has steadily increased 8.7% in the past five years, passing the S&P benchmark by one percentage point.