It has been a few years since I took look at religious based mutual funds, but a recent Kiplinger’s article brought the topic back to my attention. While I think the goal of providing someone an easy investment vehicle that matches their religious intent is a commendable goal, I can’t imagine it being possible.
The article, 5 Religion Funds for Faith-Based Investors, provides some examples of funds that are trying to do just that. My hypothesis is that I won’t have to get past their top holdings to find contradictions.
5 Faith and Religious Based Mutual Funds and their Top Holdings
I am going to ignore expense ratios and performance as I am really just focusing on whether you can just trust the idea that it is, in fact, following the religion they are touting to support. All fund definitions and top holding information is taken from Google Finance.
I should mention that I am pro-choice, have been known to have a few drinks, think contraception is a good thing and even like bet the ponies sometimes.
LKCM Aquinas Value Fund
The investment seeks to maximize long-term capital appreciation, while incorporating Catholic values investing principles in the investment process.
Top 10 Holdings
- MetLife Inc (MET) 3.13%
- Williams Companies Inc (WMB) 2.81%
- FMC Corporation (FMC) 2.75%
- Martin Marietta Materials Inc (MLM) 2.65%
- Adobe Systems Inc (ADBE) 2.62%
- Gulfport Energy Corp (GPOR) 2.52%
- Monsanto Co (MON) 2.51%
- Prudential Financial Inc (PRU) 2.50%
- Akamai Technologies Inc (AKAM) 2.46%
- CVS Caremark Corp (CVS) 2.42%
The easy pickings are MetLife and Prudential. These are huge financial companies that in no way share the funds same religious views, doubt it would be very hard to find problems there. With a quick google search it is easy to find that both Prudential and MetLife are major sponsors of planned parenthood. I am not sure if that is better or worse in the eyes of a Catholic than CVS which sells:
- Oral Birth control
- Plan B
Doesn’t sound very Catholic to me, does it?
AVEDX – Ave Maria Rising Dividend Fund
The investment seeks increasing dividend income over time, long-term growth of capital, and a reasonable level of current income. The fund will invest at least 80% of its net assets in the common stocks of dividend-paying companies that are expected to increase their dividends over time and to provide long-term growth of capital. Under normal circumstances, all of its equity investments (which include common stocks, preferred stocks and securities convertible into common stock) and at least 80% of the fund’s net assets will be invested in companies meeting its religious criteria.
The Kiplinger article indicates that it is a zero tolerance policy bragging that it doesn’t even invest in hotel chains that offer of age entertainment of their choosing. Let’s see about that.
- Intel Corp (INTC) 3.54%
- CH Robinson Worldwide Inc (CHRW) 3.35%
- Bank of New York Mellon Corp (BK) 3.27%
- Ross Stores Inc (ROST) 3.16%
- Schlumberger NV (SLB) 3.11%
- Abbott Laboratories (ABT) 2.97%
- Franklin Resources Inc (BEN) 2.91%
- Qualcomm Inc (QCOM) 2.91%
- Exxon Mobil Corporation (XOM) 2.90%
- Caterpillar Inc (CAT) 2.89%
Abbott Laboratories has to have something in there. Yup, they support planned parenthood according to one site.
ETGLX – Eventid Gilead
According to the Kiplinger article the fund won’t invest in companies that profit from alcohol, gambling, and other potential addictions.
Top 10 Holdings
- Medivation Inc (MDVN) 2.86%
- TRW Automotive Holdings Corp (TRW) 2.56%
- Macquarie Infrastructure Co LLC (MIC) 2.46%
- Agios Pharmaceuticals Inc (AGIO) 2.45%
- Palo Alto Networks Inc (PANW) 2.34%
- Magna International Inc Class A (MGA) 2.27%
- Red Hat Inc (RHT) 2.18%
- Lear Corp (LEARQ) 2.18%
- SunEdison Inc (SUNE) 2.15%
- EOG Resources Inc (EOG) 2.13%
With that intent it may actually seem like I could be wrong on this one! Very good news.
AMANX – Amana Income
The investment seeks current income and preservation of capital, consistent with Islamic principles
I do not like a lot about Sharia law, but according to the article indicates that Sharia bars “investments in companies involved in alcohol, pork, gambling, pornography or tobacco. It also requires that investors avoid interest [as such it] eliminates banks and companies whose total debt adds up to more than 33% of their stock market value.”
Top 10 Holdings
- Canadian National Railway Co (CNI) 2.99%
- Microsoft Corp (MSFT) 2.84%
- Illinois Tool Works Inc (ITW) 2.76%
- Nike Inc Class B (NKE) 2.66%
- PPG Industries Inc (PPG) 2.58%
- Bristol-Myers Squibb Company (BMY) 2.54%
- Novartis AG ADR (NVS) 2.53%
- Eli Lilly and Co (LLY) 2.47%
- Colgate-Palmolive Co (CL) 2.43%
- Carlisle Companies Inc (CSL) 2.39%
This one is a bit tougher for me since I don’t know much about Islamic law, but a quick look at LLY seems to indicate at one time in their history they sold pork based insulin. I have zero clue when the stock position was taken and whether this actually violates Sharia. This feels like stretching, but I just don’t know enough what constitutes a violation of Islamic law nor do I know enough about the major conglomerates that this fund owns.
AVEFX – Ave Maria Bond
According to the Kiplinger article this “fund applies the same Catholic principles of its stock-owning sibling to a mostly fixed income portfolio”
Top 10 Holdings (Second percentage is the amount held)
- US Treasury Note 3.875% 3.31%
- US Treasury Note 3.5% 3.26%
- US Treasury Note 2.125% 3.11%
- US Treasury Note 2.625% 1.88%
- US Treasury Note 1.375% 1.85%
- V F 5.95% 1.57%
- US Treasury Note 2% 1.56%
- US TREASURY TIP 1.54%
- Zimmer Hldgs 4.625% 1.54%
- US Treasury Note 1% 1.52%
Wow. The United States Government violates almost every Catholic principle at there. Marriage Equality for all? Check. Contraception? Check. Abortions? Check. Killing? Sure we still have a federal death penalty. Gambling? Probably.
I should repeat that I am not anti a lot of the example I used. My point was simply to point out how dangerous depending on a “religious” label might be.