Catholic Investing

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Rebekah

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:confused: I have a question. My fiance and I recently purchased a mutual fund. As I looked through the companies that were included, I noticed that pharmaceutical companies were on the list. I have mixed feelings about this because on one hand, I don’t want to support contraception or the morning after pill in any way, but on the other hand if it weren’t for these companies we would not have the medicines that save millions of lives each year. Is there any official Church teaching on this, or is it left up to the individual believers conscience?
Thanks!
 
Hi Rebekah, welcome to the forums!

I think you have a very legitimate concern.
You may want to check out the Ave Maria Mutual Fund which chooses the companies that are consistent with the Catholic faith.

God Bless,
VC
 
Rebekah,

Me again,
I found this interesting document usccb.org/finance/srig.htm which is the policy of the United States Conference of Catholic Bishops for their investments. This isn’t a guide for individual Catholics, but it seems like an interesting place to start.

I will continue to look for any “official” documents that might better answer your question of what is the Church’s teaching on individual investments.

Some of the other members of the forum might be able to find more salient info.

God bless,
VC
 
There are a number of ethical investing companies, notably Ave Maria and Aquinas Funds.
 
How does the return on these funds compare with the returns on funds from secular sources?
 
Dear Rebekah,

Have you heard the word “churning?” Many of these funds buy and sell with a high frequency (churning). While you may see a fund’s listing of certain companies this month, they may be sold next month. Most mutual funds are not permitted to invest any more than 5% of contributors’ monies in any one stock, as outlined in their prospectus.

So the chances of your supporting a pharmaceutical company is slim to none, due to the minimal amount of your investment, and due to regulations preventing a fund from owning more than 5% of any one stock. Keep in mind that these funds handle millions of dollars compared to our tiny contribution, which is only a tiny drop of sand. I don’t see any moral problem whatsoever.

OTOH, if you invested in stocks, per se, and owned a large dollar percentage of a tobacco company, maybe there could be some conscience matter. I don’t get the feeling you are a millionaire, though, and are looking to safely provide a nest egg for your family. Wise!

I dabble in stocks as opposed to mutual funds, and have become almost a day-trader due to the “churning” that takes place. If you hold it over a week, you are apt to lose all of the gain. When it is up, I sell!

Carole
 
I guess my two questions would be: “is it ethically and morally required to invest in a fund like Ave Maria funds or is it just an option?” and “Can a Catholic in good conscience work for a mutual fund that is not Ave Maria funds or Aquinas funds but one with a secular mindset?”

I might guess that a company that does not divorce itself from its principles but rather is motivated by them would end up with great results, but that is just a hypothesis. As it is, I think I heard somewhere that Ave Maria Funds is a pretty solid investment. Maybe it’s just me though. I tend to be a dummy.

Cheers.
 
Dear LPB,

I really don’t see where it would be required to invest in a “holy” fund, although you would be safer investing with officers who are morally principled and can be trusted to provide the best return for its shareholders.

Consider that when you invest in government treasury bonds, or even in your local bank with the purchase of a CD or savings acocunt, you don’t have any qualms of conscience with that, do you? There is no need to examine the officers or employees’ moral standing before you make a deposit, is there? (Excepting grave moral scandal that becomes public!)
Can a Catholic in good conscience work for a mutual fund that is not Ave Maria funds or Aquinas funds but one with a secular mindset?
Click to expand...
Can a Catholic work at a bank? Why not a mutual fund? It is an honest occupation.
Just a thought . . . my parish uses a local secular bank to deposit the offertory collection. 🙂

Carole
 
Carole,

Thanks for your reply, I really appreciate it. The reason why I posed those questions is that there exist some people who would argue that solliciting a company that donates to pro-death or pro-homosexual, or other immoral causes is in fact sinful. Groups like Ave Maria Funds go out of their way to screen companies to make sure that they don’t have these ties (and, believe it or not, a lot of them don’t. I read somewhere that after eliminating a number of companies that they wouldn’t invest in, they still have over a thousand to choose from).

Now, to those who think that an all-out boycott is necessary, I can understand a part of their reasoning, because I am reasonably well-versed in the Church’s teachings on cooperaion with evil. The problem is, I have an extremely diffficult time applying these principles to everyday life.

Cheers
 
Dear Cupofkindness,

You asked how the fund equates with a secular fund. Here is the Ave Maria Value Fund for the last three years: (up 3.21% YTD, 3-star rating from Morningstar)

money.cnn.com/quote/mutualfund/mutualfund.html?shownav=true&sid=691685&symb=AVEMX&time=3yr&compidx=aaaaa%7E0

Ave Marie Growth Fund for 3 years: (loss of 3% YTD, no rating)

money.cnn.com/quote/mutualfund/mutualfund.html?shownav=true&sid=1437765&symb=AVEGX&time=3yr&compidx=aaaaa%7E0

Morningstar 5-star rated realty company for three years:
Note the expense ratio is only .96% compared to Ave Maria’s 1.50%.

money.cnn.com/quote/mutualfund/mutualfund.html?shownav=true&sid=12713&symb=CGMRX&time=3yr&compidx=aaaaa%7E0

When I read Ave Maria’s portfolio holdings in the annual report, they seem to own shares of ordinary corporations that many other funds might own, such as Exxon Mobil, Manor Care, and Jones Apparel, besides the top 5 holdings named in the links.

I hope this is an example of what you were looking for.

Carole
 
Just a word to the wise, since we are speaking about investing with Ave Maria Funds …

If look at the first fund posted in my last message, the fund holds Dollar Tree which is down 24.75% YTD. I recall that this fund does not sell stocks for three to four years according to their prospectus.

Whoa! What about the fiduciary responsibility to the shareholders? To keep stocks at a huge loss seems to me a moral issue greater than the one which began this thread. Their other major holding is (name removed by moderator)ut-Output which is down almost 10% YTD. Two major holdings, both down more than any investor would have tolerated if it was their own money. money.cnn.com/quote/quote.html?shownav=true&pg=qu&sid=14207&symb=DLTR&shownav=true&time=2yr&uf=0

Ave Maria’s annual report ending June 2005 indicated they sold Pier 1 Imports (finally!). That company has been notoriously behind with earnings for many quarters now, and it should have been sold long ago. Here is Pier 1’s chart: money.cnn.com/quote/quote.html?shownav=true&pg=qu&sid=3785&symb=PIR&shownav=true&time=2yr&uf=0

Surely one does not need to limit their investing to a “catholic” fund. With a little homework, I believe a lot of bona-fide funds would better serve our people who have these qualms of conscience. I have not checked out Aquinas Funds, but it should be easy to get their information before investing hard earned money.

Carole
 
I had my money with Ave Maria for a few years. I experienced a pretty good gain over that time period. In fact, everything I had lost with Prudential I gained back with Ave Maria. I only cashed out the funds to buy a house, otherwise I would have been quite happy to keep my Ave Maria funds.
 
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