Most exchange-traded fund faithfuls will tell you that they are religiously opposed to mutual funds. With the release of three new ETFs, they quite literally have the chance to prove it. FaithShares Trust today launched three Christian ETFs. While mutual funds with religious themes are common, these three offerings break relatively new ground in the ETF universe.
The funds that began trading today are the Catholic Values Fund, the Christian Values Fund, and the Methodist Values Fund. Next week, FaithShares will introduce two more: the Baptist Values Fund and the Lutheran Values Fund. Together, these offerings will be the world's first Christian ETFs, says Garrett Stevens, CEO of FaithShares Trust. In the United States, their only company in the religious ETF space will be Javelin Exchange Traded Shares' Dow Jones Islamic Market International Index Fund.
Stevens started FaithShares with partner Thompson Phillips, the president of Oklahoma firm T. S. Phillips Investments, where Stevens also works. They say the new company—also based in Oklahoma—is a response to concerns they have heard over the years from clients who want to profit from investments without sacrificing their religious beliefs. "What we're trying to do is give someone market performance without the objectionable industries," Stevens says.
To do that, each fund will track an index of companies that are among the 400 largest in the United States and pass religious screens. Each fund has its own screening criteria that depend on the specific beliefs of the denomination it represents. Broadly speaking, though, the funds will stay away from "sin stocks" like alcohol and gambling companies. All told, each fund will have a portfolio of 100 equally weighted stocks. While no two portfolios are quite the same, there are 70 companies that are in all five. The funds currently have a 0.87 percent expense ratio, but that's expected to decrease as assets under management grow.