In these early years of the 21st century, investment dollars are hard at work doing a lot more than making money. They’re supporting conservation measures, fueling humane labor practices, and rewarding companies for shunning groups with ties to abortion service providers and gay rights activists. From Wall Street to Hong Kong, they’re doing all this and much more in the name of God.
Religious mutual funds have exploded over the past decade. Since 1997, assets under management in funds with an explicit faith-based mission have ballooned 35-fold from $500 million to $17.5 billion, according to data from fund tracker Morningstar. Such dramatic growth makes the sector one of the fastest growing in the financial services industry.
A couple of reasons account for the recent growth spurt. In some cases, strong financial returns are attracting new investors just as pollen draws bees. The Amana Income Fund, an Islamic fund that avoids gambling, tobacco, and meat-producing stocks, outperformed all 180 funds in its equity-income category between 2004 and 2007. Investors have piled in, and not always because they were seeking a clean conscience, according to Deputy Portfolio Manager Monem Salam.
Plus, many investors are apparently motivated by more than mammon. The past decade has given rise to new families of funds aimed not only at liberal Protestants but also politically conservative evangelicals and Catholics. Meanwhile, older funds with secular as well as Christian roots now get a hearing, at least sometimes, when they vie to impress their social visions upon corporate cultures. Socially responsible investing (SRI) has morphed from a quirky (and relatively small) niche in the 1980s to a $2 trillion mainstream industry today.