Finding Value in Funds That Cater to Faith

Article excerpt

More Americans apparently want to make investment choices that match their religious values.

And the mutual-fund industry has responded to that message with a growing evangelical zeal.

The number of religion-oriented mutual funds has jumped to 36 now from six in 1993. So if you want your money to follow Muslim guidelines, the footsteps of Christian Science, or the perspectives of the pope, there's a fund for you. "This is a tremendous growth area," says Stephen Bolt, president of Shepherd Financial Services. Eight weeks ago, the Nashville, Tenn., mutual-fund management company launched two new funds aimed at the evangelical Christian market. "This is a market that has been neglected," says Mr. Bolt. "Given the option, Christians prefer to have their money invested in a way that is a reflection of their Christian values." His funds screen out companies that deal in tobacco, liquor, gambling, and pornography. They also eliminate companies seen as supporting abortion (through executive contributions to Planned Parenthood) and homosexual lifestyles (employee benefits to same- sex partners). Other funds serve Mennonites, Muslims, Lutherans, Christian Scientists, and Roman Catholics "In the last two months, we have seen an explosion of interest in this field," says Gary Moore, a Sarasota, Fla., author of several books on religion and investing. "This movement is much larger than everyone thinks." In the scale of the multitrillion-dollar mutual-fund industry, religious funds don't add up. Their assets under management total $4.5 billion, up from $1.5 billion 10 years ago, according to a study by Wiesenberger, a Rockville, Md., firm that tracks fund performance. But a chunk of that growth results from rising stock prices, rather than the inflow of new money. Religious funds are just one corner of a much larger group seeking socially responsible investments (SRI). These funds have at least $1.2 trillion under management, says Steve Schueth, president of the Washington-based Social Investment Forum. "People want investment stuff delivered to them their way," notes Mr. Schueth. That way can range from funds aiming at homosexual investors, women, environmentalists, the politically correct, and so on. "The prospects are pretty much unlimited," he says. "There is a customizing or narrowing process under way. There is an alignment between investor values and investment values." Screens for religious funds differ according to the moral and ethical views of various religions. For instance, three MMA Praxis funds filter out "sin" stocks and nuclear-energy providers. They also eliminate defense companies because of the pacifist views of Mennonites and other Anabaptists, their primary customers. They even avoid United States Treasury bonds because they help fund defense spending. The Praxis funds also have positive filters for companies "doing things good for the environment or the community," notes J.B. Miller, sales manager for the Goshen, Ind.-based funds. …