Putting Faith in Religious Mutual Funds
More and more mutual funds are investing according to religious principles.
Socially responsible investing has become increasingly popular in recent years, with lots of mutual funds available for investors who want to keep their portfolios in line with their ethical beliefs. Most such funds avoid alcohol and tobacco stocks, but what they do beyond that varies quite a bit from fund to fund. Probably the fastest-growing subset of SRI funds is religious mutual funds, most of which are tailored to members of a specific denomination or religion, and some of which are associated with organized churches. Such funds have grown from less than $500 million in total assets 10 years ago to more than $17 billion today.
Like the broader category of SRI mutual funds, religious funds vary quite a bit in the screening criteria they use, though there are some broad similarities. They can be divided into three main categories: Catholic funds, Protestant funds, and Islamic funds. These funds won't necessarily perform better than their mainstream peers, and they can be pricier to boot. But they can give peace of mind to those who prefer not to own investments that conflict with their religious beliefs.
Arguably the most prominent Catholic-oriented mutual funds are the Ave Maria funds. The largest and oldest of these, Ave Maria Catholic Values (AVEMX), was started in 2001, and four other funds (Ave Maria Bond (AVEHX), Growth (AVEGX), Rising Dividend (AVEDX), and Opportunity (AVESX)) plus a money market fund have joined the lineup since then. The Catholic Values fund is comanaged by George Schwartz, who is also the president and CEO of the funds' advisor, Schwartz Investment Counsel. The funds' screening criteria are overseen by the Catholic Advisory Board, which includes such prominent Catholics as Domino's pizza founder Tom Monaghan and conservative activist Phyllis Schlafly.
David Kathman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.