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Where God and ETFs meet

Marketplace Staff Dec 18, 2009

Where God and ETFs meet

Marketplace Staff Dec 18, 2009


Tess Vigeland: Gold goes back for millenia as a highly valued investment. In fact, there are hundreds of references to it in the Bible. Starting with Genesis chapter two, verse 11. Look it up.

It’s almost impossible to separate religion from money, including, in the modern era, the stock market. And an investment firm called FaithShares is bringing godliness to the world of Exchange Traded Funds.

Marketplace senior editor Paddy Hirsch is here to explain and Paddy, Jeff Tyler already mentioned ETFs in his piece on gold, but let’s backtrack and explain what they are.

Hirsch: It’s basically just a mutual fund that issues shares and you can trade them on an exchange.

Vigeland: All right easy enough. And what is special about these ETFs, you know, faith-based investments aren’t exactly new, are they?

Hirsch: No no, faith-based funds are not new at all. But there’s only been one faith-based ETF up to now, which has been a Muslim fund. So this idea by FaithShares to kind of corner the Christian market with a Lutheran fund, a Christian fund, a Methodist fund, a Baptist fund and a Catholic fund, kind of gets everybody involved.

Vigeland: Wow. So what kinds of rules do these funds follow, to make them faith-based, faith friendly? And what’s the difference between the Lutheran values fund and the Catholic values fund? I mean, aren’t the fundamental values the same?

Hirsch: You’re right. Most of the time, the various denominational funds do agree — like, for example, none of them will invest in gambling companies. But there are some very interesting distinctions between them. Abortions a good one. The Catholic, Baptist and Christian funds will not invest at all in companies connected with abortion, but Lutheran and Methodist funds are allowed to. And only the Catholic fund is prohibited from investing in companies that make contraceptives.

Then there’s weapons. I spoke with Garrett Stevens, the FaithShares CEO, and here’s what he had to say on the subject.

Garrett Stevens: The Catholics will invest in, as long as no more than 5 percent of a company’s revenues are derived from weaponry. Baptist values has no weaponry; Methodist funds is 10 percent rule; the Lutheran, they only prohibit nuclear weaponry; and the Christian values one has no prohibition on weaponry.

Hirsch: That’s pretty telling, right?

Vigeland: OK, how did FaithShares come up with these percentages? I do not remember Matthew, Mark, Luke or John mentioning any of them.

Hirsch: Well, the company actually gets its guidance from the various governing councils of these churches. Each one has got investment guidelines to help their respective flocks, as it were, when they’re investing. And FaithShares has gone to these councils and has followed those rules.

Vigeland: Well, finally, as with any fund, we have we to ask about the fees. Are these ETFs a good deal or perhaps it’d be better to invest in the offering plate?

Hirsch: Well, they’re not bad actually, because the fees are less than 1 percent, which is pretty good for an ETF. But if you’re worried about the offering plate, well, actually FaithShares said it would actually donate 10 percent of the net income derived from the ETF to various charitable groups connected with the denomination. So, maybe you can skip the offering plate this year.

Vigeland: Oh I would never advise that.

Hirsch: You’re a good person, Tess.

Vigeland: Paddy Hirsch, our senior editor here at Marketplace. Thanks so much and happy holidays.

Hirsch: Happy holidays to you, Tess.

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