Religion-Based ETFs Return With Real Promise

March 31, 2017

Remember Faith Shares?

I say “reiteration” above because the ETF industry has seen this movie before, with Faith Shares, which launched a suite of religion-based ETFs in 2009, only to shutter the suite of five funds in 2011 after attracting $10 million in assets.

The funds were: the FaithShares Baptist Values Fund (FZB), FaithShares Catholic Values Fund (FCV), FaithShares Lutheran Values Fund (FKL), FaithShares Methodist Values Fund (FMV) and FaithShares Christian Values Fund (FOC).

Also, in October 2010, Javelin Investment Management shut its Shariah-focused ETF, the JETS Dow Jones Islamic Market International Index Fund (JVS), after it too had failed to attract significant assets.

So what’s different this time? A lot. Primarily that, in the last six years, the ETF industry has grown tremendously in size, while investor awareness from millennials to senior citizens has grown just as big when it comes to ETFs.

More people identify themselves with a religion than a social cause, and the idea of investing in the broad market in different slices—whether that employs smart beta or fossil free or Catholic value screens—is not so odd anymore.

Good ideas commonly arrive before their time, for various reasons. With the right distribution, and launching a product with investors committed before it hits the market, religious-valued ETFs like the three on the market show they can be viable products. The $134 million in asset collected by CATH, BLES and ISMD in less than a year lend credence to potential success this time around.

At the time of writing, the author own none of the ETFs mentioned. Drew Voros can be reached at [email protected].

 

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