No Guilt In Shunning The Catholic Values ETF

It may serve a large target market, but how holy is this new fund?  

Editor, Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

They say never talk about religion or politics over the dinner table. But how can you avoid the former if you decide to invest in the upcoming S&P 500 Catholic Values ETF from New York-based provider Global X?

Here at, we’ve talked about green investment, we’ve talked about sexism and confusing jargon, we’ve even talked about football fans – but as of yet I’ve never had much of an opportunity to delve into the Bible. Suddenly, being friendly to thy neighbour, helping the poor and chastity before marriage are all on the table as investable concepts. The ETF clearly aims to serve as a solution for a certain market.

And a very large market it is. According to my diligent Wikipedia search, there are around 70 million Catholics in the U.S. alone, the largest religious sector in the country.

However, religion-based ETFs don't have a great track record - the db x-trackers DJ Islamic Market Titans 100 UCITS ETF is one of the few such funds in Europe, but has just £15 million under management. Given the lack of momentum of Shariah-compliant ETFs, it is questionable whether the new Catholic ETF has serious potential.

In fact, in a $3 trillion global market, ETF assets that are either Shariah-compliant or fit under the environmental, social and corporate governance category amount to just $14.1 billion – but almost $8 billion of that is in just three commodity ETPs, according to ETFGI data.

Deborah Fuhr from research house ETFGI that previous Catholic and Methodist-focused ETFs had “struggled to gather assets”.

Unveiling The ETF

Let’s look under the robes of this ETF. Launched officially on 10 August, the index is designed to screen out companies from the eminent S&P 500 that are deemed as unfit by the United States Conference of Catholic Bishops, a membership of 315 lay people, priests, deacons and other religious persons. What are the criteria? In brief, any company that deals in the following:

  • Biological weapons, chemical weapons, cluster bombs and landmines
  • Nuclear weapons
  • Conventional military sales
  • Child labour in employment or the supply chain

The new index holds 448 stocks. This means that just 52 stocks of the S&P 500 were deemed unholy. The top holdings in this Catholic index, therefore, are strikingly similar to the mainstream: Apple, Mircrosoft, Exxon Mobil and Wells Fargo. Therefore, information technology stocks and financial companies still make up the bulk of exposure at around 19 percent and 16 percent, respectively.

The next time the Pope reaches for his iPad he may well feel a bit better about it, even if the Chinese factory workers are still protesting against their harsh working conditions. And we can all be sure that Exxon Mobil isn’t employing children, even if it is polluting the atmosphere.


Having Your Wine And Bread And Eating It

If you do decide to eat the bread and drink the wine, you can make a good profit. Simulated back tests of the new index shows that over five years, religious investment earnt you 16.59 percent, versus the S&P 500’s 16.33 percent. Catholic Values also beat the S&P 500 over one year and three years by a slim margin, which is not surprising given the minor differences in the two indexes’ holdings.

Religious leaders’ opinions can bring a touch of humanity and good sense to what otherwise risks becoming a greedy free-for-all. When the Church of England spoke out against and divested last year from Wonga, the shark loans company, I nodded in agreement.

But I’m reluctant to praise this index launch too warmly. By choosing to invest in the normal S&P 500 Index and shunning its Catholic counterpart, you are perhaps shamed into feeling that you have dismissed Catholic values i.e. you are not a good person. In the same way that “smart beta” implies everything else is not “smart”, the guilt of investing outside the holy realm is, if nothing else, a good marketing tactic to gain assets.

The new index could also potentially serve as a distraction to the wider picture – investing in equity markets is still capitalism, however you package it up. Shareholders are still demanding returns from their companies, sometimes to the detriment of the man on the street. Microsoft’s Bill Gates is one of the richest men in the world as the gap between rich and poor widens. And whether deemed decent enough by the Catholic conference or not, companies are not perfect. Oil companies are still digging things up. Apple has still not sorted out its reputation for low battery life in a large swathe of its expensive devices.

Ultimately, investing in anything is driven by profit, profit, profit – and what’s so Catholic about that?


Rachael Revesz joined in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.