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USA, August 2004: It all started a few years ago with socially responsible investing. SRI became the catch word for investors looking into investing in mutual funds or the stocks and bonds of select companies. Expounding criteria such as we only invest in companies that do not derive any profit or a minute amount of profit from the tobacco industry, nuclear arms or from using child labor, SRI dealers were and still are a hit to many investors. Sparked by SRI, religious investors were asking for more. They wanted investments that coincide with their religious faith and hence the newest movement called faith-based or morally responsible investing was conceived. The article says, “The movement seems to have three primary components that often overlap: individual and institutional investors who only want to invest in companies that reflect their core values; faith-based mutual funds that screen out certain companies according to morally determined values; and investment advisors who attempt to make their spiritual beliefs the foundation of their businesses.” President Dennis Carpenter of International Wealth Management from Grapevine, Texas, says, “I think that advisors have been slow to move in this area of mixing investments and faith. Some of them have great programs. Some are well screened and some are cost efficient, but not all. You have to look at these like any mutual fund. If the expense ratio is too high, even though the goal is admirable, you need to bring things into line with the competitive world. They need to be judged on the same criteria as mainstream funds.” Dan Moisand, a principal with Spraker, Fitzgerald, Tamayo & Moisand, in Melbourne, Florida, says, “I think it is unwise to try to separate faith from any part of one’s life. Spirituality is part of who we are. Planners should certainly incorporate this part of a client’s life into the planning process.”



So today’s faith-based investor has choices, especially if the investor is from a Christian background. The article sites the example of Christian Brothers Investment Services that was founded in 1981. It says, “CBIS employs a ‘life ethics’ screen to weed out companies involved in contraception and abortion; a ‘violence’ screen to eliminate companies involved in ‘the spread of militarism’ (weapons of mass destruction), land mines, and retail handguns; a tobacco screen; and a pornography screen.” Other funds that espouse values based on Roman Catholic, Evangelical Christian, and Islamic beliefs are now available, according to this article.



Any investor reading the article would be inclined to ask how the return on faith-based investors compares with other traditional investments. Greg Calson, a Morningstar analyst, says, “It’s important for people to realize when looking at these funds that the performance may or may not be attributable to the screens being applied. The same two variables apply to every fund — the talents of management and costs.” Frank Coleman, VP of Christian Brothers Investment Services, adds, “Our performance is competitive, and in areas where it may not seem competitive, that has less to do with SRI than with market issues or manager issues. We’ve discovered that there’s enough breadth in the capital marketplace that you can always find companies that are good investments.” So what it boils down to is that an investor does not have to sacrifice personal ethics in order to have comparable returns. This is a win-win situation for any religious person.



So just how much choice does a faith-based investor have? The article does not specifically mention any funds that espouse values unique to Hinduism. It does however allude to the fact that financial advisors want to promote investments that coincide with their own personal values. If advisors of the Hindu faith do the research on mutual fund companies and purpose options to like-minded clients, a whole new book of business could open up for them. The article sums it up, “The faith-based investing movement will likely continue to grow over the next few years, fueled both by the demand from individual clients and by the growing number of financial advisors who are making their religious faith an increasingly prominent part of their businesses.”

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