Introduction
For many investors, financial decisions go beyond just seeking profit. They want their money to reflect their values, ethics, and faith. Catholic values investing is an approach that aligns investments with the moral and social teachings of the Catholic Church, ensuring that capital is deployed in a way that supports human dignity, social justice, and ethical business practices.
In this article, I’ll break down the principles of Catholic Social Teaching (CST) as they relate to investing, compare Catholic values investing to other ethical investing strategies, and explore how investors can build a morally responsible portfolio while still aiming for strong financial returns.
What Is Catholic Values Investing?
Catholic values investing (CVI) is an investment philosophy that follows the moral teachings of the Catholic Church, as outlined by the United States Conference of Catholic Bishops (USCCB) and the Vatican.
At its core, this approach avoids investments in companies that violate Catholic teachings and actively seeks companies that promote the common good.
Key Principles of Catholic Values Investing
The USCCB’s Socially Responsible Investment Guidelines highlight five key principles:
- Protecting Human Life – Avoiding investments in companies involved in abortion, embryonic stem cell research, euthanasia, and other practices that undermine human dignity.
- Promoting Human Dignity – Supporting businesses that uphold fair labor practices, oppose human trafficking, and respect workers’ rights.
- Reducing Arms Production – Avoiding companies involved in the production of weapons of mass destruction, landmines, and other harmful military technologies.
- Pursuing Economic Justice – Encouraging investments in firms that provide fair wages, ethical supply chains, and corporate social responsibility.
- Protecting the Environment – Supporting companies that follow sustainable practices and avoid environmental harm.
These principles are rooted in the broader Catholic Social Teaching (CST), which emphasizes human dignity, solidarity, and stewardship of creation.
Catholic Values Investing vs. Other Ethical Investment Strategies
Investors looking to align their values with their portfolios often compare Catholic values investing to other faith-based and ethical investing approaches.
| Investment Approach | Key Focus Areas | Examples |
|---|---|---|
| Catholic Values Investing | Avoids abortion, weapons, human rights violations; supports economic justice and environmental stewardship. | Ave Maria Funds, LKCM Aquinas Catholic Equity Fund |
| Socially Responsible Investing (SRI) | Excludes harmful industries (tobacco, gambling, fossil fuels) and promotes corporate social responsibility. | Calvert, Domini Impact Funds |
| Environmental, Social, and Governance (ESG) Investing | Focuses on sustainable business practices, fair labor, and diversity. | Vanguard ESG Funds, iShares ESG Aware ETFs |
| Islamic (Sharia) Investing | Prohibits interest (riba), gambling, and unethical businesses. | Amana Mutual Funds |
While Catholic values investing shares similarities with SRI and ESG investing, it differs in its faith-based moral framework—especially in areas like abortion, embryonic research, and traditional marriage values, which are not always covered by ESG or SRI approaches.
How to Build a Catholic Values Investment Portfolio
For investors who want to align their portfolios with Catholic teachings, there are three main strategies:
1. Invest in Catholic Values Mutual Funds and ETFs
Many investment firms offer funds that screen for Catholic values. Some of the most well-known include:
| Fund Name | Type | Key Holdings |
|---|---|---|
| Ave Maria Growth Fund (AVEGX) | Mutual Fund | Large-cap growth stocks that align with Catholic values |
| LKCM Aquinas Catholic Equity Fund (AQEIX) | Mutual Fund | Socially responsible US equities |
| Global X S&P 500 Catholic Values ETF (CATH) | ETF | S&P 500 companies screened for Catholic values |
These funds conduct moral screening to exclude companies that contradict Catholic teachings, while still maintaining strong investment performance.
2. Use a Catholic Values Stock Screener
If you prefer individual stock investing, you can use stock screening tools to find Catholic-aligned companies. Some tools include:
- USCCB Investment Guidelines – Provides a framework for moral investing.
- Christian Investment Services – Offers faith-based investment consulting.
- Sustainalytics and MSCI ESG Ratings – Help screen companies for ethical business practices.
3. Work with a Catholic Financial Advisor
A faith-based financial advisor can help build a customized portfolio that follows Catholic moral teachings while balancing risk and return. Some advisory firms specialize in Biblically Responsible Investing (BRI) and Catholic Values Investing.
Catholic Values Investing Performance: Does It Sacrifice Returns?
One of the biggest concerns for faith-based investors is whether avoiding certain industries will lead to lower returns.
To analyze this, let’s compare the performance of a Catholic values ETF to a traditional S&P 500 fund over the past 5 years:
| Investment | 5-Year Return (Annualized) | Expense Ratio |
|---|---|---|
| S&P 500 Index Fund (VOO) | 12.4% | 0.03% |
| Global X S&P 500 Catholic Values ETF (CATH) | 11.8% | 0.29% |
While the Catholic ETF slightly underperforms the S&P 500, the difference is minimal. This suggests that investors can follow Catholic values without significantly sacrificing returns.
In fact, faith-based investing can outperform in certain markets, as it often avoids companies with high litigation risk (e.g., tobacco, gambling) and prioritizes long-term ethical business practices.
Challenges and Considerations
While Catholic values investing offers a moral and ethical approach, it comes with some challenges:
🔹 Limited Investment Choices – Many companies do not align with Catholic teachings, reducing diversification options.
🔹 Higher Fees – Catholic-focused funds often have higher expense ratios than traditional index funds.
🔹 Moral Gray Areas – Some businesses operate in industries that may be ethically complex (e.g., pharmaceuticals that produce both life-saving drugs and contraceptives).
Investors must weigh these factors carefully while maintaining a balanced, diversified portfolio.
Conclusion:
Catholic values investing offers a way for faithful investors to align their portfolios with their beliefs and morals. While it may slightly underperform a broad-market index fund, it provides ethical integrity, risk mitigation, and long-term sustainability.
