Top Five Biblically Responsible ETFs (Review)
Several exchange-traded funds (ETFs) let you invest according to your theological beliefs while mirroring the broader market’s risk and return. We review the top Biblically Responsible funds.
SustainFi June 15, 2021
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Faith-based investing lets religious investors participate in the market while adhering to their core beliefs.
What are faith-based funds or Christian ETFs?
Christian ETFs help you match your investments with Biblical values. These funds exclude stocks of companies involved in adult entertainment, alcohol, human rights violations, gambling, and abortion. (Note: Biblical values may not be the same as the values of the average environmental, social, and governance (ESG) investor. Many socially responsible investors are pro-choice and pro-LGBTQ values.)
The main Christian ETF providers are Inspire Investing, Timothy Plan, and Global X.
With $735 million in assets under management, Silicon Valley-based Inspire is the market leader in faith-based funds. It offers eight Biblically Responsible and ESG funds, covering U.S. and global stocks and bonds. Inspire also offers an actively managed Biblically Responsible ETF, the Inspire Tactical Balanced ESG ETF (RISN).
Inspire donates 50% of its profits to support impactful ministry projects around the globe. Most recently, Inspire is working to provide a church building, clean water, and a medical clinic to a village in the mountains of Guatemala.
Inspire also offers a fund screener that helps you see if your investments are aligned with Biblically Responsible values.
Florida-based Biblically Responsible mutual fund manager Timothy Plan offers four faith-based ETFs. Timothy Plans filters stocks based on Biblical imperatives, excluding companies supporting pornography, abortion, alcohol, and more. Their ETFs cover U.S. large and mid-cap stocks, high dividend stocks, U.S. small-cap stocks, and international stocks.
Global X is an ETF provider that offers a wide line-up of funds, including two Biblically Responsible funds for U.S. and international stocks. The ETFs are Global X S&P 500 Catholic Values ETF (CATH) and Global X S&P Catholic Values Developed ex-U.S. ETF (CEFA). Global X funds exclude companies linked to stem cell research, adult entertainment, abortion, and weapons manufacturers. The exclusions are based on socially responsible investment guidelines from the U.S. Conference of Catholic Bishops.
Are Biblically Responsible ETFs more expensive than conventional funds?
Biblically Responsible ETFs tend to be costlier than non-Biblical equivalents. For example, Global X S&P 500 Catholic Values ETF (CATH) costs 0.29% ($29 annually for a $10,000 investment), compared to 0.03% for the Vanguard S&P 500 ETF (VOO). But this may be a small price to pay for investing according to your beliefs.
Do Biblical exclusions impact perfromance negatively?
It is hard to say what impact Biblical exclusions have on performance. Each of the three Biblically Responsible fund providers defines Biblically Responsible investing differently. Most faith-based funds were launched in the past five years, and there are no relevant studies. However, Global X S&P 500 Catholic Values ETF (CATH) easily beat the S&P 500 since its inception in 2016.
Make an impact with your money
Top five Biblically Responsible ETFs
💰 Top Pick
We like the Global X S&P 500 Catholic Values ETF (CATH). In addition to being the cheapest ETF on the list, the fund’s investment principles are clearly defined by the U.S. Conference of Catholic Bishops. As the largest Biblically Responsible ETF, it is also one of the cheapest to trade.
|Fund||Ticker||Expense Ratio||Assets ($m)||Inception Date||MSCI Rating||Sustainalytics Rating|
|Global X S&P 500 Catholic Values ETF||CATH||0.29%||550||2016||A||4 / 5|
|Inspire 100 ETF||BIBL||0.35%||241||2017||AA||3 / 5|
|Timothy Plan U.S. Large / Mid-Cap Core ETF||TPLC||0.52%||191||2019||A||3 / 5|
|Inspire Global Hope ETF||BLES||0.52%||143||2017||AA||4 / 5|
|Timothy Plan High Dividend Stock ETF||TPHD||0.52%||140||2019||A||1 / 5|
We review the largest Biblically Responsible funds:
Global X S&P 500 Catholic Values ETF (CATH)
- Assets under management: $550 million
- Expense ratio: 0.29%
Launched in 2016, Global X S&P 500 Catholic Values ETF (CATH) is the largest Biblically Responsible ETF. It tracks an index of large-cap U.S. stocks selected from the S&P 500, omitting companies at odds with Catholic values. Catholic values are defined by the U.S. Conference of Catholic Bishops.
As a result, CATH excludes companies with revenues from unconventional weapons, contraception, abortion, stem-cell research, and pornography. Conventional weapons are not banned so long as their sales are under 50% of total revenues. Firms with any evidence of using child labor are excluded.
As a result, CATH includes 448 stocks out of the 500 in the S&P 500. CATH excludes many big pharma stocks like Johnson & Johnson (JNJ), Pfizer (PFE), Abbvie (ABBV), and Merck (MRK). Top holdings are Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN), just like in the S&P 500.
Biblical exclusions have helped performance. CATH outperformed the S&P 500 since its inception in 2016, rising 129% through June 2021, vs. 106% for the S&P500. It also outperformed year-to-date in 2021, rising nearly 15% vs. 13.3% for S&P 500.
Inspire 100 ETF (BIBL)
- Assets under management: $241 million
- Expense ratio: 0.35%
Inspire 100 ETF (BIBL) invests into Biblically aligned, large-cap U.S. stocks with over $20 billion in market cap. The definition of Biblical values is proprietary to Inspire. The methodology excludes companies involved in abortion, gambling, alcohol, tobacco, adult entertainment, and more. Inspire analyzes data on large-cap stocks, picking 100 with the highest proprietary Impact Scores.
BIBL doesn’t own the big tech stocks that we usually see in large-cap funds. We compared BIBL to the iShares S&P 100 ETF (OEF). The ETFs had only ten overlapping holdings. BIBL’s top three investments were Nvidia (NVDA), Costco (COST), and Honeywell (HON), compared to OEF’s Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN).
Timothy Plan U.S. Large / Mid-Cap Core ETF (TPLC)
- Assets under management: $191 million
- Expense ratio: 0.52%
Launched by Biblically Responsible mutual fund provider Timothy Plan, TPLC invests in U.S. mid and large-cap stocks screened for Christian values. Stocks are weighted based on volatility (to reduce exposure to market volatility.)
Stocks must have positive earnings in each of the four most recent quarters and satisfy Timothy Plan’s proprietary criteria for Biblically Responsible investing. Timothy Plan excludes businesses involved in alcohol, tobacco, gambling, abortion, and pornography, among others.
As of June 2021, TPLC had 328 holdings, with very little concentration in any particular stock. The top ten stocks were only around 5% of the fund’s assets. The top three holdings were insurance brokerage Arthur J Gallagher & Co (AJG), waste management company Republic Services Inc (RSG), and Costco Wholesale Corp (COST).
The fund is quite expensive, with a 0.52% expense ratio.
Inspire Global Hope ETF (BLES)
- Assets under management: $143 million
- Expense ratio: 0.52%
Another ETF from Inspire, BLES invests in 400 Biblically-aligned, large-cap stocks around the world. Inspire screens out companies involved in abortion, gambling, alcohol, pornography, and more. After the exclusions, Inspire looks for companies that provide products and services geared towards education, fighting disease, and helping the poor.
BLES is a global fund, investing around 50% of its assets in U.S. stocks, 40% in developed markets foreign stocks, and 10% in emerging markets. All stocks are given equal weights. As of June 2021, the fund’s top three holdings were Tata Steel (TATASTEEL), Nvidia Corp (NVDA), and Investec PLC (INVP).
This fund offers global diversification plus alignment with Biblical values, but it is also quite pricey, with a 0.52% expense ratio.
Timothy Plan High Dividend Stock ETF (TPHD)
- Assets under management: $140 million
- Expense ratio: 0.52%
- Dividend yield: 2.44%
Launched in 2019, Timothy Plan High Dividend Stock ETF (TPHD) invests in large-cap U.S. stocks with high dividends. As with other Timothy Plan Funds, all stocks are screened for Christian values. Companies involved in alcohol, tobacco, gambling, abortion, pornography, or alternative lifestyles are excluded.
The fund invests in around 100 highest-yielding stocks. Top holdings are insurance brokerage Arthur J Gallagher & Co (AJG), waste management company Republic Services Inc (RSG), and Costco Wholesale Corp (COST). Most of the fund’s holdings are in high-dividend-payout sectors like industrials, utilities, and financials.
We note that the environmental, social, and governance score from ESG rating provider Sustainalytics is extremely low (1 globe out of five), partially due to high fossil fuel involvement due to owning all the oil and gas-powered utilities. This may be a problem for investors who are more focused on sustainability.
It is now easier than ever to leverage Biblically Responsible ETFs to express your values through your investments.
🔔 Interested in learning about GuideStone, the largest Biblically Responsible mutual fund provider? Read the review of GuideStone.