Some might liken the term “faith-based investing” to active management (tee hee!), but I’m actually referring to something else. When I say faith-based investing, I’m referring a specific type of SRI (Socially Responsible Investing) in which a portfolio invests within the parameters of a religion’s belief set.
Sharia Compliant Funds
One example are investment funds which are Sharia compliant. Sharia is the religious body of law of Islam, and some notable rules state that you cannot sell something you do not own which means you can’t short a stock. Also, fixed income instruments that pay interest are not allowed by Islam. However, there are Sharia compliant funds that manage to achieve substantially the same results of these types of investments through some extra layers of transactions. Sharia compliant investment funds are one of the fasted growing class of investments in the world.
FaithShares Advisors in Oklahoma have filed to launch five index ETFs which essentially screen large cap stocks based on certain religious values:
- FaithShares Baptist Values Fund
- FaithShares Catholic Values Fund
- FaithShares Christian Values Fund
- FaithShares Lutheran Values Fund
- FaithShares Methodist Values Fund
Each will hold the top 100 stocks based on the screens, and will then hold the positions on an equal weighted basis.
Do any readers screen their investments based on social screenings?