Making Finance More Faith-Friendly

In a faltering economy, religious-based mutual funds and indexes are on the rise.

Mutual funds and indexes geared toward religious investors have surged over the past several years. A study released today by MMA Praxis Mutual Funds found that the number of religious mutual funds has increased 121% since 1999, from 34 funds to 75 in 2002.

The number of mutual funds overall has increased just 16% in the same time period.

"U.S. mutual fund investors are finding religion," said John Liechty, president of MMA Praxis Mutual Funds, a group of mutual funds that invests according to Anabaptist principles. He said American investors are beginning to understand that "investing is about more than just money."

A religious mutual fund is a fund that takes certain religious beliefs into account when selecting investments. Religion-based investing is a subset of the broader trend known as socially responsible investing, a growing category of funds that screen investments based certain social parameters. A typical socially conscious mutual fund may avoid investing in the tobacco industry or in companies that aren't environmentally-friendly. The MMA Praxis study covered only funds that are affiliated with a particular religion.

The range of religion-based mutual funds in the U.S. includes several Catholic fund families, the Mennonite fund group, a Lutheran fund, the Timothy Plan for conservative Christians, and a burgeoning group of Islamic mutual funds. Religious funds typically screen out companies that do not abide by their particular faith's values. These screens often rule out companies involved in industries like gambling and defense.


The Ave Maria Catholic Values Fund, for example, bases its investments on the principles of the Catholic Church and therefore screens out any companies with a direct link to abortion or whose policies the fund determines to be anti-family. The fund, launched by Thomas Monaghan, former owner of Domino's Pizza, and managed by Schwartz Investment Trust, does not invest in hospitals where abortions are performed or in companies that donate to groups like Planned Parenthood.

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Rebecca Phillips
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