ETF market gets religion

Investors praying for divine inspiration may have gotten their wish today when three faith-based exchange-traded funds made their debut. The FaithShares Catholic Values Fund (FCV), FaithShares Methodist Values Fund (FMV) and FaithShares Christian Values Fund (FOC), are tailored to each denomination's teachings and recommendations for investing. FaithShares Advisors LLC worked with the FTSE Group and KLD Research & Analytics to create a series of custom indexes on which the funds are based. On Dec. 15, FaithShares anticipates launching two additional funds: the FaithShares Baptist Values Fund (FXB) and FaithShares Lutheran Values Fund (FKL). “We created these funds to meet the needs of investors who want to participate in the potential of the stock market, yet be good stewards of their money,” Thompson S. Phillips Jr., president of FaithShares, said. Not surprisingly, the ETFs hold a lot of the same stocks. Each anticipates holding 100 stocks, about 70 of which are common to each, Garrett Stevens, chief executive of FaithShares Advisors, noted. But there are important differences, he said. For example, when it comes to companies involved in the production of alcohol, the Catholic Values Fund considers such companies on a “case-by-case” basis, Mr. Stevens said. The Christian Values Fund, however, excludes them altogether, he said. The relatively high expense ratio (0.87%) of the FaithShares ETFs, however, might give investors pause. But the expense ratio will come down as the ETFs gain assets, Mr. Stevens said. FaithShares has also committed to donating 10% of the net income derived from each ETF back to a ministry or charity supported by that fund's denomination, he said.