Ever wonder how the pope would do as a stock picker? We might find out. Last month the first Vatican-approved equity index launched. The Stoxx Europe Christian Index is a compilation of 533 European companies that adhere to Catholic values. Meaning no profits from porn, gambling, weapons, tobacco, or birth control. Oil, on the other hand, is OK. BP and Shell are among the index's top 10 components. "Environmental issues are not part of our screening criteria," says Michael VanDam of Christian Brothers Investment Services, a cosponsor of the index and one of six committee members determining its components.
Faith-based investing dates back to 18th-century Quakers' refusing to invest in tobacco and the slave trade, and today accounts for much of the $2.7 trillion of socially responsible investments, a 300 percent increase since 2000. It's not just Christians looking to put their values at play in the market. Jews and Muslims are keen to invest based on religious law. Demand for kosher funds in Israel is on the rise. The first ones launched about a decade ago and now contain an estimated $263 million. Sharia compliant Islamic finance is booming, with some $950 billion invested, up from $800 billion in 2008. If you're considering faith-based investing, be aware returns historically have been lower than broad-based funds, though that's improving. "Value and values are no longer contradictory," says Stephen Hine of EIRIS, a London-based ethical-research group.