Last week saw the launch of new Christian-branded exchange traded funds. Basically, they screen investments for companies involved in controversial businesses, such as arms or alcohol companies.They’re surprisingly niche, given that there is a Lutheran Values Fund (FKL), a Baptist Values Fund (FZB), a Catholic Values Fund (FCV) and a Methodist Values Fund (FMV), in addition to a broader Christian one (FOC).
Which is all fine, some people probably want to limit the kind of companies they invest in according to their personal beliefs.
What’s disturbing, as Lara Crigger at Index Universe highlights, is that once again it appears we have new ETFs that are niche-branded with pretty steep fees.
Index Universe: But FaithShares also charges a pretty penny for the privilege of investing according to one’s moral compass: Their Christian-based ETFs charge a 0.87 per cent expense ratio, which makes them one of the most expensive ETFs on the market. (It should be noted, however, that each fund does donate 10 per cent of its net income back to a denomination-specific charity.)
So far, religiously themed ETFs have yet to prove themselves more than just a neat PR gimmick. Investors might say they want morally themed funds, but so far, the one such fund available for any length of time has failed to attract many investment dollars.
We’re always disturbed by these kinds of products, since peoples’ good intentions, whereby they’re more likely to overlook high fees, are in a sense taken advantage of.
While this can be accepted at some level, these are ETFs not the small religious items one might buy from a gift shop. The managers can earn massive amounts of excess fees off of peoples’ good intentions here, thus you’d hope for fees more in-line with what funds of similar investment complexity would charge.