It's been a ho-ho-holy year for investors in some faith-based funds.
Morningstar lists dozens of funds that base their investments not only on what their managers think will fare well, but where their faith leads them. The three top-performing religious funds are from GuideStone Financial Resources, a Christian company whose funds do not invest in any company that is publicly recognized as being in the liquor, tobacco, gambling, pornography or abortion industries.
The three top performrs are GuideStone Growth Equity (GGEYX), up 33.1% this year through Thursday, GuideStone Emerging Markets Growth (GEMYX), up 32.8%, and GuideStone International Equity (GIEYX), up 29.2%.
GuideStone Growth Equity also is the top-performing faith-based stock fund for the past five years, gaining an average 15.7% a year.
Close behind the three GuideStone funds is Praxis Growth Index (MMDEX), up 27.5% through Thursday. The fund screens out companies that don't align with Mennonite values: abortion, adult entertainment, alcohol, firearms, gambling, nuclear power, predatory lending, tobacco, and weapons production and support systems. It also scores companies on environmental, social and governance (ESG) criteria and commits 1% of its assets to community development investing.
Those strictures haven't ruled out companies like Microsoft (MSFT), Amazon (AMZN) or Facebook (FB).
Ave Maria Growth (AVEGX), which is up 27.3% through Thursday, is a fund with no formal endorsement by the Catholic Church, though a Catholic Advisory Board meets regularly with the management team at Schwartz Investment Counsel, Inc., to review the fund's religious standards and criteria. The board includes economist Larry Kudlow, former Domino's Pizza CEO Thomas Monaghan, former baseball commissioner Bowie Kuhn, as well as Cardinal Adam Maida.
The fund's performance has not been a one-time Christmas miracle: It has been in the top 18% of all mid-cap growth funds the past decade, relying on a fundamental, growth-at-a-reasonable-price. While it has no strictures against alcohol or tobacco, it avoids companies involved in abortion, stem cell research and pornography.
Not all faith-based funds are Christian.
Morningstar lists 11 funds that are compliant with Sharia law, the religious law forming the Islamic tradition. Amana Growth (AMIGX) is the top performer of that list, up 29.8% this year.
The fund doesn't receive interest and avoids stocks of companies whose primary business activities include the manufacture or marketing of alcohol, gambling or gaming activities, conventional interest-based financial services, pork and pork products, and pornography.