Much has been written about the burgeoning demand for investments that match up with investors’ ethical stance in the internet age – but there is another side to this.
Faith-based investments, a subset of ethical investing, do not generate the same level of attention but have come under the spotlight in recent times in the US. This follows the launch of two so-called biblically responsible exchange traded funds that notably exclude companies that participate in or support lesbian, gay, bisexual or transgender “lifestyles”.
Here, LGBT rights are lumped together with companies that have any degree of participation in abortion, gambling, alcohol, pornography, terrorism and oppressive regimes.
US asset manager Inspire Investing is the architect behind the ETFs. Its president and chief executive officer, Robert Netzly, said: “Our clients want to align their investments to support biblical values, which includes the traditional one man, one woman definition of marriage and invest in Inspire ETFs accordingly.”
The firm also adopts a positive screening, investing in a host of businesses including those that partake in philanthropic activities and notably those involved in protecting and preserving the environment.
Yet, interestingly and somewhat paradoxically, the strategy does not omit investment in some of the more contentious areas such as oil and armaments.
Mr Netzly said such investments are typically excluded from other socially responsible funds because they are managed to reflect the “progressive liberal agenda”.
He added: “Inspire ETFs are here to give investors with conservative, biblical values investment options that align with their values and beliefs. Oil and defence are not prohibited in the Bible, so we do not screen them out as we would an abortion drug manufacturer or pornography company.”
This is not to say that the investment strategy is skewed to those types of companies. Both funds follow indices created by the fund house Inspire. It adopts a scoring system which gauges companies based on their alignment with biblical values to determine the “most inspiring” companies, according to Mr Netzly.
Global hope?
Both investment products – called Inspire Global Hope Large Cap and Inspire Small/Mid Cap Impact – are not restricted to US investors as they are traded on the New York Stock Exchange, meaning UK investors could choose to invest if they so wished.
Despite the contentious nature of the ETFs, they have garnered public interest, attracting some £61m in assets in less than two months from launch, according to Mr Netzly.
A spokesman for the company cited Bloomberg data which showed that out of the 55 funds launched in the US to April this year, the Inspire Global Hope ETF is in the top 10 most successful, according to assets under management.
“The liberal media was surprised by how many people voted for Trump, and now they are being surprised at how many investors are buying Inspire ETFs,” Mr Netzly said. Back in Britain, such esoteric ‘anti-gay’ investments do not exist in the Investment Association universe, a spokesman for the trade body confirmed.
