CATHOLIC-BASED VALUE INVESTING

Aligning Catholic Values with Investments: A Growing Priority for Catholic Investors

 

Dana Investment Advisors has managed a Catholic values portfolio since 2000. We currently provide equity, fixed income, and balanced strategies for many Catholic-based entities. These have allowed Catholic investors to adhere to the pillars of the church while meeting their responsibility as stewards. Despite a recent increase in the adoption of faith-based investment guidelines, many Catholic investors remain on the sidelines, often confused by industry terms and the impact on performance. We believe the time has come to address these concerns and align mission with money.

Consider the following:

  • “You don’t have to be a Christian to want to invest your money in companies that make the world a better—not worse—place. But Christians… have additional insight through the Scriptures that all our money—and our time—belongs to God, not just the money we tithe, or the time we spend in worship.”  
    "Investing and Faith: The Impact of Faith-Based Investing" Steve French, May 2019

  • “When the Vatican assembles investors, entrepreneurs and academics for its second Impact Investing Conference later this month, it will do so as the mainstream wealth management industry has started to catch on to the term." 
    "Blessed Returns" Financial Times on the second Vatican Impact Investing Conference, June 2016

  • “Sustainable issues represent one of the most important cost and revenue drivers in the modern corporate world. By selecting stocks that comply with the USCCB (The United States Conference of Catholic Bishops), the S&P 500 Catholic Values Index aims to include companies with resilient business profiles by addressing the ethical challenges that can make a stronger investment case."   
    PRNewswire on the launch of the S&P 500 Catholic Values Index, August 2015

  • “A sense of solidarity with the poor and the marginalized has led you to reflect on impact investing as one emerging form of responsible investment... aimed at assessing innovative forms of investment which can benefit local communities and the environment, as well as providing reasonable return." 
    Pope Francis' at the first Vatican Impact Investing Conference, June 2014


The United States Conference of Catholic Bishops (USCCB) issued policy guidelines for Catholic investors in 2003. The six primary USCCB pillars include environmental, social and governance (“ESG”) concerns and specific human life and dignity guidelines. 

 
USCCB Pillar Example of Portfolio Impact
Protecting Human Life Excludes companies with ties to abortion, contraceptives or fetal stem cells
Reducing Arms Production Excludes weapons manufacturers & defense contractors
Pursuing Economic Justice Seeks companies with positive wage & labor practices
Protecting the Environment Seeks companies with positive carbon & energy conservation metrics
Encouraging Corporate Responsibility Seeks companies with positive corporate governance & stakeholder policies 




Catholic-Based Value Investing

Sustainability, SRI, impact, faith-based and mission investing all fall under the ESG (environmental, social and governance) umbrella, and the types of investors pursuing these strategies are just as numerous. Dana offers a Catholic ESG Strategy that adheres to the six primary USCCB Pillars and their guidelines.

Dana's Invitation to Catholic Investors

We invite Catholic investors to contact us with any questions, concerns, information requests or other issues related to Catholic values investing. We also encourage you to get to know more about us. Below is a Q&A with Dana's Catholic ESG Strategy Portfolio Manager, Duane Roberts, CFA, who recently answered seven questions around the firm’s faith-based investment process, policy statements and portfolio customization. In addition, if you want to dive deeper into understanding Catholic-based value investing under the ESG umbrella, we also have created a guidebook, Everything You Want to Know About ESG Investing, available below for download.

We hope you find this information resourceful.  

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Q&A with Catholic ESG Strategy
Portfolio Manager 

2019.09-Dana-ESG.Duane-Roberts
Duane Roberts, CFA 

Q:  Why are investment strategies that incorporate Catholic values becoming more mainstream?
A: This is an interesting question. The Pope has been a dynamic figure in addressing responsible investment, and his impact should not be underestimated. A broader driver appears to be increased interest in social justice issues – in many cases spurred by the younger generation – with particular attention paid to environmental sustainability, peaceful conflict resolution, and various manifestations of inequality.

Q: What is the primary objective of Dana's Catholic values strategies?
A: We aim to integrate Catholic values into strategies that deliver above-market returns with lower volatility relative to standard benchmarks.

Q: How does Dana incorporate Catholic values into its investment process?
A: We use the USCCB investment guidelines as our blueprint. The guidelines are intentionally broad, allowing Dana to screen for both positive and negative company attributes. A common example is the Catholic mandate to protect human life in the context of abortion and contraception. Therefore, Dana will not invest in health care or pharmaceutical companies providing or manufacturing such products or services. This is a negative screen. Examples of positive screens include crediting companies for exemplary environmental policies, social diversity, or exceptional corporate responsibility.

Q: Is it difficult to apply Catholic values to an investment process that seeks to outperform traditional benchmarks?
A: It can be difficult in the sense that the investment team must operate within a constrained, “Catholic-approved” investment universe, but it can also be quite rewarding. When weapons manufacturers or large pharmaceutical companies outperform, our Strategies face headwinds. Positive factors such as good corporate governance are often rewarded.

Q: Will Dana review our current Investment Policy Statement (“IPS”) to ensure that it reflects current Catholic values and investing principles?
A: Absolutely. We are happy to work with clients to develop a custom IPS that incorporates a client’s own Catholic-based values.

Q: Can Dana manage my entire investment portfolio while incorporating Catholic values?
A: While we have extensive experience managing U.S. equity, fixed income, and balanced Catholic values strategies, certain asset classes have not yet been incorporated into Dana’s investment process.

Q: What if we want specific companies or industries excluded from our portfolio?
A: We receive these requests frequently and endeavor to construct a Catholic values strategy that meets the client's goals and objectives. More often than not, we are able to customize specific holdings for our clients.

Q: In general, if someone is interested in learning more about Catholic-Based Investing, what do you recommend the next steps are?
A: Sustainability, SRI, Impact, Faith-based and Mission Investing all fall under the ESG umbrella, and the types of investors pursuing these strategies are just as numerous. Dana created a guidebook, Everything You Want to Know About ESG Investing. It's full of a lot of very useful information and is available for download. If you are interested in reading this guide, click here to get your copy.  And as always, you are more than welcome to contact us.  We'd be more than happy to connect with you and answer any questions you may have.  
Interested in how ESG investing can fit into your portfolio? Download Free Guidebook.
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The Dana Funds are distributed by Ultimus Fund Distributors, LLC. (Member FINRA). Ultimus Fund Distributors, LLC and Dana Investment Advisors are separate and unaffiliated.
Dana Large Cap Equity, Tickers: DLCIX, DLCEX
Dana Small Cap Equity, Ticker: DSCIX
Dana Epiphany ESG, Ticker: ESGIX

You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Dana Funds before investing. The Funds’ prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Funds’ prospectus by calling 1-855-280-9648.

There is no guarantee that this, or any, investment strategy will succeed. Past performance of the strategy is not an indicator of future performance of the funds.

The universe of acceptable investments for the Dana Epiphany ESG Funds (DSCIX & ESGIX) may be limited as compared to other funds due to the Dana Epiphany ESG Funds’ ESG investment screening. Because the Dana Epiphany ESG Funds does not invest in companies that do not meet its ESG criteria, and the Fund may sell portfolio companies that subsequently violate its screens, the Dana Epiphany ESG Funds may be riskier than other mutual funds that invest in a broader array of securities. ESG investing is considering environmental, social and governance factors into your security research.

Small cap investing involves greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat.
 
Given the significant differences between separately managed accounts and mutual funds, investors should consider the differences in expenses, tax implications and the overall objectives between separately managed accounts and mutual funds before investing. 

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