With the explosion of exchange traded funds (ETFs) as one of the fastest growing investment products there has been a rapid diversification in the types of funds offered.
ETFs that track everything from video games to the whiskey industry have cropped up in the past few years.
A new ETF set to be launched will track companies based on how closely they align with “biblical values.” The Inspire Global Hope Large Cap ETF tracks an index that scores companies based on their adherence to certain criteria established by the distributor, Northern Lights, and the investment advisor CWM Advisors, which the prospectus says is “doing business as Inspire.”
From the ETF prospectus:
“The index provider selects foreign (including emerging markets) and domestic large capitalisation equity securities included in the Russell 1,000 Index, MSCI EAFE Index, and MSCI Emerging Markets Large Cap Index using the index provider’s Inspire Impact Score®, a proprietary selection methodology that is designed to assign a score to a particular security based on the security’s alignment with biblical values and the positive impact that company has on the world through various environmental, social and governance criterion.”
Precluded companies include those that profit from alcohol and gambling. Additionally, the ETF rules out companies that support an “LGBT lifestyle.”
Robert Netzly, the CEO of the ETF’s investment advisor Inspire, told ETF.com that the company decided to screen out companies supporting same-sex marriage to fulfil the desires of more conservative Christian investors.
“What we’ve found is that there’s a lot of investors — not just Christians, but investors with conservative values — that want to support traditional marriage,” Netzly told ETF.com. “Part of our exclusionary screening, that biblically responsible screening, that’s one of the components that we look at. Certain companies choose to take a hardline stance on the issue of gay marriage, for instance, and our investors don’t want to support that issue.”
In the past, companies ranging from Goldman Sachs to Microsoft to Gap have all taken pro-gay marriage stances and would thus be likely to be excluded from the Inspire ETF.
After excluding such companies, the company uses a proprietary scoring system to grade companies and select them for inclusion in the underlying index and ETF.
“The index provider uses software that analyses publicly available data relating to the primary business activities, products and services, philanthropy, legal activities, policies and practices when assigning Inspire Impact Scores to a company,” said the ETF prospectus. “The 400 securities with the highest Inspire Impact Scores are included in the Index and are equally weighted.”
The ETF joins the “Catholic Values ETF” as the only religious-based funds on the market according to ETF.com.
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