As Catholics, we are called to be good stewards of all that God blesses us with, including our property and our money.
If you are fortunate to have some discretionary money above and beyond your living expenses and that which you have donated to the Church, then there are several ways for Catholics to invest money in a manner that aligns with Church teaching and Catholic values.
The Bishops Weigh In…
The United States Conference of Catholic Bishops (USCCB) provides a recommended framework for Catholic investors, namely the types of investments to avoid and those to seek out. The USCCB provides six guiding principles. Investments should:
- Protect Human Life
- Promote Human Dignity
- Reduce Arms Production
- Pursue Economic Justice
- Protect the Environment
- Encourage Corporate Social Responsibility
The UCSSB also states that “the private sector must be not only an engine of growth and productivity, but also a reflection of our values and priorities, a contributor to the common good.”
Catholic Mutual Funds
For any investor, one of the best ways to tap into the power of the stock market is to invest in a mutual fund, which pools the money of many investors to buy stocks and securities.
Since there are thousands of funds to consider, the task of selecting the right one for you may seem daunting. Fortunately, among the thousands, there are now a few that follow the guidelines established by the USCCB. Three current options with a track record are:
In accordance with the recommendations made by the UCSSB, these three mutual fund companies exclude investing in companies that conflict with Catholic social teaching, such as those that are involved in abortion or those that support Planned Parenthood, embryonic stem cell research or pornography.
The LKCM Aquinas Catholic Equity Fund first screens out companies involved in activities prohibited by Catholic social teaching, then they score companies based on their impact on society across four areas: life and family, social justice, environmental record and corporate government practices. Investments in the LKCM Aquinas Catholic Equity Fund range across industries with many household brands such as CVS, Dollar Tree, Goodyear Tire, Home Depot, Kohls, Oracle, Party City, Paypal and Whirlpool a part of their mix.
Major stock holdings in the Epiphany FFV Fund include St. Jude Medical, Express Scripts, Texas Instruments, Costco, Lowes and 3M.
The Ave Maria Catholic Values Fund has the longest track record of any of these Catholic investment options, launching in 2001 with the support of Thomas S. Monaghan, the successful Catholic founder of Domino’s Pizza.
Currently the Ave Maria Catholic Values Fund has assets in consumer discretionary, energy, financial and health care holdings such as St. Jude Medical, Noble Energy, HP, Liberty Interactive and Nordstroms. Companies deemed anti-family are excluded from this fund based upon the moral judgments of Ave Maria’s Catholic Advisory Board, which includes Lou Holtz (former football coach of Notre Dame) and retired Cardinal Adam Maida of the Archdiocese of Detroit, Michigan. The Ave Maria Catholic Values Fund, though, does not exclude defense companies or those selling alcohol or tobacco.
Regarding returns on your investment, historically, both the LKCM Aquinas Catholic Equity Fund and Epiphany FFV Fund had an annualized rate of return of 8% in the past 5 years at the end of June 2016, whereas the Ave Maria Catholic Values Fund has had a 6% rate of return since its inception in 2001.
The minimum investment to open an account with the Ave Maria Fund and Epiphany Fund is $1,000, while the LKCM Aquinas Catholic Equity Fund requires $2,000.
Not all investments are right for all people at all stages of life. Know what you’re investing in. Research the fees. Understand how mutual fund investing fit into your overall financial game plan.
Any investment in a mutual fund or individual stock comes with some measure of risk with no guarantee that you will make money, especially if you try to time market fluctuations. Mutual fund investing is usually best suited for money not needed in the short-term or for paying living expenses. The longer the time horizon, historically, the more likely that invested money will grow and compound. Typically, those nearing retirement or already in retirement should be more conservative with their investment strategy, reducing the amount in stocks and mutual funds.
Profit is a necessary part of the financial world and a necessary function of markets. That said, when it comes to the love of money, it’s good to remember the wisdom of Hebrews 13:5:
“Make sure that your character is free from the love of money, being content with what you have; for He Himself has said, ‘I will never desert you, nor will I ever forsake you.’”