FaithShares Advisors thinks investors can have faith and strong financial performance. And now the firm has the initial returns from its Christian exchange-traded funds to prove it.
In December, FaithShares launched three ETFs focusing on Christian investors who want to invest in portfolios that exclude companies that profit from “objectionable industries,” such as gambling, alcohol, tobacco, pornography, weapons and other activities that are against their faith. Although there had been Christian mutual funds in the past, these were the first Christian ETFs.
On Wednesday, FaithShares announced that despite the fact they launched the ETFs “during the turbulent times since mid-December,” the funds have outperformed the broader markets' performance.
“The funds' performance is really not a surprise to us," said J. Garrett Stevens, the Chief Executive Officer of FaithShares Advisors. "We specifically designed the funds with an equal-weighting of the stocks in the portfolio in an effort to outperform the broad markets during most types of market cycles. Even though it is a very short period of time, these results begin to verify the hypothetical back-testing we did."
Each of the five FaithShares funds, the FaithShares Baptist Values Fund, the FaithShares Catholic Values Fund, the FaithShares Christian Values Fund, the FaithShares Lutheran Values Fund and the FaithShares Methodist Values Fund are re-balanced each June to have 100 large-cap equally weighted stocks in each portfolio.
FaithShares uses the Environmental, Social and Governance rankings from KLD Research and Analytics to select the companies in their indexes. Equal weighting and stock selection helped FaithShares boost its return, the company said.
From 2000 to 2006, assets in other faith-based investments grew seven-fold underscoring the public’s interest in investing according to their beliefs, according to FaithShares Trust.
The FaithShares Funds include the FaithShares Catholic Values Fund, the FaithShares Methodist Values Fund, the FaithShares Christian Values Fund, the FaithShares Baptist Values Fund and the FaithShares Lutheran Values Fund, each of which are tailored to the denomination’s teachings and recommendations for investing.
David Kathman, a Morningstar fund analyst, said that religious funds are an area that has grown in the last ten years, partly because there are more people investing in general, and in mutual funds in particular, and a wider range of people are investing.
“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 S. Phillips Jr., the president of FaithShares. “As an ETF, each of our funds will include 100 stocks of large, well-known companies but specifically exclude those considered to be ’objectionable industries’ by a specific denomination.”
Stevens said a lot of research went into understanding the various denominations to design the funds. “The Christian Values Fund is the most conservative and we feel it answers the needs of non-denominational church members and other denominations not specifically represented by our other ETFs,” he said.