Chicago, USA - Earlier this year George Schwartz penned a public letter mentioning "abortion on demand" and the "debauchery that has poisoned the culture."
But the Bloomfield Hills, Mich., man wasn't writing as a politician, or a member of the clergy, or even a private citizen.
Schwartz was performing his duties as the president of a five-year-old family of mutual funds that bases its investment decisions on the core teachings of the Catholic Church.
Schwartz's goal: Continue to build on Ave Maria Mutual's roster of 15,000 shareholders who have invested about $450 million in funds that screen out companies that facilitate abortion, pornography and non-marital partner benefits.
"We're hoping our assets get into the billions," said Schwartz, who saw his investor ranks grow by 40 percent in 2005. That way, Ave Maria would be able to influence practices at companies such as Eli Lilly, which the fund sold when the company began offering benefits to unmarried partners of employees.
"If we were the size of Fidelity then maybe they would have listened to us," Schwartz said.
He's not the only mutual fund manager who has struck a nerve among investors who are as concerned about hot-button issues as they are about hidden loads.
While faith-based funds represent only a sliver of the mutual fund industry the value of assets in religious-based funds has jumped from $2.37 billion in 2000 to $16.03 billion at the end of July, according to estimates by Morningstar Inc., a Chicago-based investment research provider.
The overall mutual fund industry has grown less quickly. According to the Investment Company Institute, the trade group for the industry in the United States, mutual fund assets have grown from $6.8 trillion at year-end 1999 to $9.4 trillion at year-end 2005.
And investors do not always have to sacrifice performance. Some of the funds have earned recognition from Morningstar or Lipper as high performers.
The interest appears to be multidenominational.
Assets in Amana Mutual Funds, which invests according to Islamic principles, have grown from $30 million in 2003 to over $315 million.
Described as a pro-life, pro-family, biblically based mutual fund group, Timothy Plan, which offers nine funds, has assets that have grown from $31 million in 1999 to more than $400 million today. In April, Timothy said its large/mid-cap value fund was honored by Lipper, a mutual fund research company, for its 2005 performance.
Built on Presbyterian faith
Meanwhile, New Covenant, founded in 1999 and built on the heritage of the Presbyterian faith, now has grown to a family of five funds with total assets of $1.5 billion.
"There are more faith-based mutual funds out there than five years ago, and the ones that have been around have gathered a lot of assets," Morningstar mutual fund analyst David Kathman says. "There has been an upswing in religious feeling in this country, with the culture wars and a lot of people trying to emphasize their religion more in the current political climate, and one of the ways to do that is through investing."
As for the funds' performance, Kathman said it is difficult to generalize, noting there are both liberal and conservative Christian funds with differing views on issues ranging from the environment to defense spending.
Muslim funds such as Amana avoid interest-based institutions like banks; that's an exclusion not many Christian funds are likely to make.
Retirement fund changes
Last month, GuideStone Funds marked its fifth anniversary, with assets of $8.6 billion, up $1.6 billion from its debut in August 2001 as a registered mutual fund.
Previously it was solely the retirement plan, consisting mostly of nonregistered funds, of ministers and workers of Southern Baptist churches and related institutions.
In 2004, GuideStone opened itself up to like-minded evangelical churches and claims to be the nation's biggest Christian-based, socially screened, registered mutual fund company.
Christian Anabaptists are among the other religious groups with a fund family grounded in their religious principles, the Goshen, Ind.-based MMA Praxis Mutual Funds. It has grown from three funds with $154 million in assets in 1997 to five funds with $804 million in assets today.
Devout consumers
Investing trends also mirror what is going on in other economic sectors, with devout consumers also dishing out more dollars for material things. CBA, the trade group for Christian retail channels, said sales of Christian products by its members were $4.3 billion in 2004, up from $4.2 billion in 2002 and $4 billion in 2000.
Meanwhile, at the 43rd annual convention of the Islamic Society of North America, held Sept. 1-4 in Rosemont, Ill., sessions included "Concepts of Islamic Banking" and "Estate Planning in Compliance with U.S. Law and Shariah Obligation."
One of the speakers in a session called "Retirement Planning and Options" was Monem Salam, director of Islamic investing for Bellingham, Wash.-based Saturna Capital Corp., which runs the Amana funds.
The Amana fund avoids investments in businesses involved in such industries as alcohol and pornography and those associated with interest.
Amana's criteria also screen out companies whose debt to total capital exceeds 33 percent.
"We like clean balance sheets," Salam said.