This is a season for religious gatherings and holidays. Jews have started Passover celebrations, Muslims are marking Ramadan and Easter has arrived for Christians.
It’s a time of reflection and a moment to affirm a commitment to faith for believers. But is it also an opportunity for adherents to alter their investment plans and base them on religious principles?
Religious or faith-based investment funds provide one answer. These portfolios all try to provide investors with solid returns without buying stocks or bonds issued by objectionable or “sinful” companies, though those definitions vary.
Most Americans probably don’t invest in this manner, though faith-based investing is getting easier to do with the advent of more religious mutual- and exchange-traded funds. These portfolios have professional money managers at the helm who can, among other tasks, sort through companies based at least partly on the types of businesses they operate.
Mutual funds and exchange-traded funds are both examples of broadly diversified portfolios that investors usually can purchase for a few thousand dollars, if not less. The two categories vary in a few key respects — one being that people can buy or sell mutual funds only at a single daily closing price, while ETFs can be traded at various prices throughout the day.
Not a large grouping of funds
While religious funds have existed for decades, they haven’t taken the investment world by storm. The funds are still comparatively few in number, with relatively small assets under management.
Investment researcher Morningstar doesn’t even break out religious funds as a separate category, instead lumping them in the larger ESG — or environmental, social and governance grouping — which numbers around 600 funds.
Broader ESG portfolios often are more geared to avoiding carbon polluters, other environmental violators and companies engaged in animal testing/abuses. Religious funds are more focused around lifestyle issues.
While Christian funds…
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