Does God Have a Place in Your Portfolio?

A growing number of ETFs and mutual funds attempt to appeal to religious investors

Many investors object to investment decisions made with anything other than pure quantitative analysis. Yaron Brook, president and executive director of the Ayn Rand Institute, agrees with that sentiment. “You should evaluate an investment based on whether it achieves its intended goal,” says Brook. “In general, the goal of a business is to make money, not to serve a social agenda. Companies should be left alone to maximize their profits.” While that may seem a bit cold, Brook poses some questions for investors to ponder: “What does socially responsible investing even mean? Is it socially responsible to manufacture the weapons we need to protect ourselves in a time of war? Is selling alcohol socially responsible? And if not, what about Big Macs and M&M’s? Socially responsible is an undefined term that’s tailor-made for people who want to control what businesses can and can’t produce.”

Other experts point to another flaw in SRI and faith-based investing: a dearth of choices in asset classes other than equities. A purely faith-based investor, therefore, isn’t able to properly diversify his portfolio. “There are no SRI investment options with respect to emerging markets equity funds, emerging markets bond funds, or global strategic fixed-income funds. There are some SRI bond funds but they are primarily focused on government, municipal, and corporate debt in the U.S.,” admits Eric Lybarger, principal and owner of Evergreen Global Investment Group L.L.C., which specializes in investment advice and portfolio management.
The debate over religion-influenced investing won’t be settled anytime soon. In the meantime, those who purchase faith-based funds will be praying for outsized gains.

This article originally appeared in the May 2010 issue of Black Enterprise magazine.

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  • Christian Broker

    I’ve looked at these funds and NONE of them “screen” like the traditional SRI funds. Smoke and mirrors. Only a handful of “religious funds” screen for Christian values — Ave Maria, Eventide and Timothy Plan funds are about the only one’s I have found to do what they claim. Sheryl Nance-Nash must not have done much reseach on this article, and that’s too bad.

  • http://blackenterprise Kim

    When I am investing this is somewhat an important characteristics, this is why I have not invested in a company like Altiria, but it is not my main reason. It is important to find companies which have good moral values, but also are helping your portfolio grow.

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