Are ETF Owners Smarter

Are ETF Owners Smarter?

Investors are increasingly favoring Exchange Traded Funds (ETFs) over mutual funds (Crittenden, 2017). From 1/31/18 – 3/10/20, ETFs received net inflows of $723 billion while mutual funds experienced net outflows of $450 billion (ICI – Weekly Estimated Flow Reports, 2020).

Why are investors moving away from mutual funds to ETFs?

Why are investors moving away from mutual funds to ETFs? Is it all marketing and hype? While it may be difficult to understand the exact motives of the average investor moving from mutual funds to ETFs, one question we can ask is whether investors who own ETF securities actually have more investor knowledge than non-ETF owners. Put another way, are ETF owners smarter than non-ETF owners? 

During July of 2019, the Journal of Financial Planning published an article where my colleagues and I asked these questions (Enete et al., 2019). We used the 2015 National Financial Capability Study (NFCS) investor survey, published by FINRA, which asked investment-related questions to 2,000 individuals who owned investments outside of retirement accounts. One of the questions in the survey asked participants whether they owned ETF securities in their non-retirement portfolio. This question allowed us to compare the characteristics (e.g., age, income, education) of the survey participants who owned ETF securities (22% of the 2,000 participants) versus the non-ETF owners. There were also detailed questions about investor knowledge, so we were able to assess whether the ETF investors had more investor knowledge than non-ETF owners, as well. 

Our results showed that ETF owners were more likely to be under 44 years of age and non-white. Sex, marital status, education level, and household income did not play a significant role in predicting ETF ownership. In addition, ETF ownership was associated with higher financial satisfaction and higher risk tolerance, as compared to non-ETF owners. 

Regarding being smarter, investor knowledge did play a significant role in predicting ETF ownership. Our results showed that, if an investor was able to score just one point higher in their subjective (i.e., “I believe I am smart”) and objective (i.e., “I took a finance test that proves that I am smart”) investor knowledge scales, that would be associated with a 4% and 1% higher probability of owning an ETF security in a participants’ non-retirement portfolio, respectively.

Investor knowledge did play a significant role in predicting ETF ownership.

Why did more investor knowledge predict higher ETF ownership? 

As explained in our paper, “there are a number of benefits to investing in an ETF product over a mutual fund product, with the most notable benefits being lower capital gain tax payments, lower fees, and improved liquidity. Investors in ETFs should expect to pay lower capital gain tax payments than mutual funds given their trading structure (Kostovetsky, 2003). In addition, ETF investors should expect to pay lower fees since accounting costs are determined at the shareholder level (rather than fund level). ETFs do not have load fees (which tend to be one of the largest fees associated with mutual funds), and ETFs do not have 12b-1 fees (marketing and distribution fees). Finally, ETFs provide investors an additional liquidity benefit, as ETFs share prices allow for intraday values, whereas mutual funds are only priced once-per-day at their net asset value (Enete et al., 2019, p. 44).

There are a number of benefits to investing in an ETF product over a mutual fund product.

While ETFs have many advantageous qualities, it is important to acknowledge that ETFs are not for all investors and also carry some drawbacks. For example, smaller ETFs may have thinner trading and premiums to NAV (net asset value), as well as a commission cost per trade.

Even with considering some of the disadvantages of owning ETFs, it does not undermine the key implications of this study that ETF owners do have more investor knowledge, have higher financial satisfaction, are younger, and have higher risk tolerance levels when compared to non-ETF owners.

 


REFERENCES

Crittenden, E. (2017). Advisers Show a Return to Cash, Continue to Favor ETFs. Journal of Financial Planning, 30(6), 18.

Enete, S., Reiter, M., Usrey, W., Scott, A., & Seay, M. (2019). Who is Investing in ETFs? Exploring the Role of Investor Knowledge. Journal of Financial Planning, 32(7), 44–53.

ICI – Weekly Estimated Flow Reports. (2020, March 10). https://www.ici.org/research/stats/flows

Kostovetsky, L. (2003). Index mutual funds and exchange-traded funds. The Journal of Portfolio Management, 29(4), 80–92.

Inspire Investing Ranked #3 in ‘Top 50 Fastest Growing Firms’ by FA Magazine

Faith-based ESG investing firm Inspire Investing was ranked the 3rd fastest growing Registered Investment Advisor (RIA) in the nation in FA Magazine’s ‘Top 50 Fastest Growing Firms – 2020’ annual report.

SAN JOSE, CA / ACCESSWIRE / AUGUST 20, 2020 — Inspire Investing, a global leader in the faith-based ESG investing industry, ranked as the 3rd fastest-growing firm in Financial Advisor Magazine’s (FA) annual “RIA Ranking” report. Inspire grew total assets under management (AUM) by 152.03% during calendar year 2019, rising from $251M at the outset to $634M in total AUM at year end. As of August 12th, 2020, Inspire managed just over $700M in AUM.  This marks the fourth consecutive year that Inspire has been recognized in the RIA Ranking of fastest growing firms.

“Scoring as the third fastest-growing investment firm in the nation is a major accolade for our incredible staff, passionate investors and the work God is doing in the faith-based investing industry,” said Robert Netzly, CEO of Inspire Investing. “Inspire is completely dedicated to managing money for the glory of God with a faith-based ESG approach to biblically responsible investing principles. People used to tell me there was ‘no market’ for our biblical approach to managing investments. Not so many people say that now. God is on the move in the financial industry.”

FA’s “Top 50 Fastest Growing Firms” ranking is compiled by an annual survey that ranks firms’ based on percentage growth in assets from the previous calendar year and is the premier industry ranking of independent RIA growth. Financial Advisor Magazine is a major publication targeted to financial professionals that aims to deliver essential market information and strategies to help advisors better serve their clients and grow their firms.

Christian Financial Advisors Driving Growth

Inspire attributes much of their growth to successfully recruiting Christian financial advisors onto their Inspire Advisors RIA platform launched in January, 2019. Inspire Advisors is focused on serving Christian financial advisors and both their Christian and non-Christian clients with a faith-friendly platform.

“Many Christian advisors are looking for a firm to join that will encourage them in their journey to deeply integrate their faith with their practice, something hard to find in a secular firm,” commented Netzly. “We are seeing strong demand from Christian advisors for an RIA firm that shares their faith and empowers them to live it out in their daily work with utmost excellence.”

Inspire Advisors has successfully attracted over $250M in new advisor assets since launch in 2019.

About Inspire Investing
Inspire Investing is a leading provider of faith-based ESG investments and creator of the globally recognized Inspire Impact Score™ which is used by investors around the world to measure the biblical alignment of their investments according to Biblically Responsible Investing (BRI) principles. For more information, visit www.inspireinvesting.com.

 

Media contact:
Eric Smyth
(831)382-6572
inspire@inspireinvesting.com

Investment advisory services offered through CWM Advisors, LLC dba Inspire, a Registered Investment Advisor with the SEC.

 

Are Christian Shareholders Morally Responsible?

Are Christian Shareholders Morally Responsible?

For many years, Microsoft has sold a video game called, Metropolis: Lux Obscura. In this game, comic book art is used to deliver graphic nudity and violence to children and adults. If Christian investors held shares in Microsoft (which many do through their ownership of the S&P 500 index fund), would they be morally responsible for the sale of this video game? And, if so, what should they do?

“Is a Christian shareholder morally responsible for the actions of a corporation?”

What does it mean to be morally responsible? One definition of moral responsibility: “the status of morally deserving praise, blame, reward, or punishment for an act or omission performed or neglected in accordance with one’s moral obligations.” (1)

Drawing from this definition, are Christian shareholders of Microsoft deserving of blame for Microsoft selling this pornographic video game? 

In order to respond to this complex question, let me share with you a family story where I was deserving of blame for a terrible crime.

Last year, after the five year drought in California ended, a beautiful natural phenomenon occurred known as the “poppy apocalypse.” My wife and I and our two kids went to see this amazing event where the hills, as far as the eye could see, were filled with bright, orange poppies. As we walked along the painted hills, my four year old daughter proudly plucked a handful of poppies and posed for a picture. I smiled big and reached for my camera. How darling, I thought. 

Suddenly, my wife came running over, “What are you doing!” she yelled. “It is illegal to pick poppies in California parks!” 

I know what you are thinking now: what kind of monster allows their daughter to break the law by picking protected poppies!

I am deserving of moral blame for her action even though she is the one that picked the flowers and committed the crime. I said nothing as my daughter smiled for the picture. It is my act of omission that makes me morally responsible.

“It is my act of omission that makes me morally responsible even though she picked the flowers and committed the crime.”

In many ways, this same “poppy scenario” plays out with shareholders. Just like my daughter looked up towards me right before she picked the flowers, a manager of a corporation looks up towards their shareholders right before they make important business decisions. Managers take seriously the interests of shareholders. Shareholders are given the voting power to determine the board of directors, who then have the power to fire them for not representing shareholder interests. 

Going back to the Microsoft example, the corporation represents the investor. Inasmuch as the corporation acts on the investor’s behalf, the investor is a co-author of the wrongful act, and therefore complicit or morally co-responsible for it.(2)

“Inasmuch as the corporation acts on the investor’s behalf, the investor is a co-author of the wrongful act, and therefore morally co-responsible for it.”

Built into the fabric of a limited liability corporation is an accountability system where management is meant to consistently look up at the face of their shareholders, whose interests they have been hired to represent. And, as managers look up to their investors, most Christians are silent. This makes Christian owners of Microsoft stock morally responsible for the production of the pornographic game, Metropolis: Lux Obscura through an act of omission.

To make matters worse, the label “Christian owner” is an oxymoron. 

A Christian can never be a true owner. God is the ultimate shareholder whose interests we are seeking to represent as vice-regent (Genesis 1). Just like managers of corporations are meant to look up at shareholders before they make decisions, Christian shareholders are managers who are meant to look up at the face of the ultimate Owner of all capital, and see whether they are representing His interests.

“We need to look up at the face of the ultimate Owner of all capital, and see if we are representing His interests.”

So, what is a Christian shareholder to do? 

It is important to be clear that Scripture does not give any explicit guidance about what to do. The Bible does not mention what a Christian minority shareholder should do when management acts in a way that is not consistent with Biblical truth. 

In general, Christian shareholders have responded in one of three ways:

  1. Do nothing.
  2. Stop investing in the stock market.
  3. Change the way they invest in the stock market.

It is important not to judge other Christians as they respond in one of these three ways. Responding requires wisdom, gaining wisdom is usually a long journey and everyone’s journey looks a little different. Our collective response must be full of grace and truth together. 

Regarding the third response, Biblically Responsible Investing (BRI) is how many Christian money managers, who sought the wisdom of God, have changed the way they invest in the stock market. While it is true that no investment product is truly “Biblically responsible,” the BRI title simply portrays an effort by Christian investors to be sensitive to Biblical truth in how they invest their money, a very good endeavor. 

In general, an investment product becomes “BRI” when it engages in any of the following activities (ideally all three):

  1. Corporate engagement
    • Making the Chrisitan voice known to management.
  2. Negative screening
    • Not owning certain companies that do not represent the interests of Christians.
  3. Positive screening
    • Finding companies to invest in that represent the interests of Christians particularly well.

As Christians use BRI products, they collectively form a voice that lets management know their interests and frees those shareholders from being responsible for immoral management decisions.

“Christians can create beautiful culture if they fully embrace their moral responsibility for how they invest and seek to proclaim the fragrant interests of Christ to the managers of this world’s capital.”

Microsoft’s game, Metropolis: Lux Obscura, creates culture – a bad type of culture. Investments, in general, are culture-makers since certain services and products are fed with Christian savings. 

A gardener brings to life either flowers or weeds in his garden, depending on where he waters. In the same way, Christian investors bring to life either weeds or flowers in their neighborhood, depending on how they invest. Christians can bring to life beautiful culture if they fully embrace their moral responsibility for how they invest and seek to proclaim the fragrant interests of Christ to the managers of this world’s capital.


REFERENCES

(1) Honderich, T. (2005). The Oxford Companion to Philosophy. In The Oxford Companion to Philosophy. Oxford University Press. 

(2)  Sandbu, M. E. (2012). Stakeholder Duties: On the Moral Responsibility of Corporate Investors. Journal of Business Ethics, 109(1), 97–107. https://doi.org/10.1007/s10551-012-1382-7

Inspire Investing Highlighted for Faith-Based ESG Investing Efforts in US SIF Foundation’s “Rise of ESG in Passive Investments” Report

Inspire Investing was highlighted in the US Sustainable Investment Forum (SIF) Foundation’s report titled, “Rise of ESG in Passive Investments” for their efforts to bring a faith-based approach to environmental, social and governance (ESG) investing. Only eight leading investment firms out of many were selected for special mention case-studies for their work in the growing ESG investing industry.

“We are honored to be highlighted in this industry-leading research study by the US SIF,” stated Robert Netzly, CEO of Inspire Investing. “The US SIF is the leading voice in the secular sustainable investing industry, and their research is a primary source of information for investors around the globe interested in ESG incorporation. We are proud to represent faith-based investors everywhere in this major report.”

About the “Rise of ESG in Passive Investments” Report

The US SIF “Rise of ESG in Passive Investments” report explores the growth of passive ESG investing and the debate on the effectiveness of passive ESG funds versus active ESG funds, as well as the increasing flow of assets to passively managed ESG funds.

A key observation of the report is that the “net flows into passively managed ESG funds outpaced net flows into their actively managed counterparts during the four of the past five years…In 2019, net flows into passive ESG funds totaled $12.7 billion compared to $8.7 billion for active ESG funds.”

Inspire Investing was highlighted as one of eight ESG investment firms chosen as case-studies for their work to combine passive investing and ESG.

The US SIF is a leading voice in sustainable ESG investing and produces some of the most widely followed and influential research in the industry.

About Inspire Investing
Inspire Investing is a leading provider of faith-based ESG investments and creator of the globally recognized Inspire Impact Score™ which is used by investors around the world to measure the biblical alignment of their investments according to Biblically Responsible Investing (BRI) principles. For more information, visit www.inspireinvesting.com.

Inspire Investing Announces Faith-Based ESG Investor Engagement Campaign For 2020

Inspire Investing released the details of their Faith-Based ESG Investor Engagement Campaign for 2020. Fifty-five publicly traded companies were selected for Inspire’s faith-based investor engagement efforts based on specific criterion to help improve their Inspire Impact Score™, a faith-based measure of environmental, social and governance (ESG) metrics used by investors around the world to align investment portfolios to support biblical values.

“Our desire is to help companies to connect with and understand the issues that are important to faith-based investors so that they can take proactive steps to improve their Inspire Impact Score and attract interest from the large and growing faith-based investor population,” stated Robert Netzly, CEO of Inspire Investing. “We have worked with many companies over the years to help them better understand the concerns of faith-based investors and are excited to begin efforts with this year’s class.”

Selection Criterion

Fifty-five companies were selected for exhibiting strong scores across several important ESG issues, yet being at risk for having their Inspire Impact Score downgraded due to one specific diversity-related issue unique to each company that was identified within the past year

“These fifty-five companies are doing some great things and excel in numerous ESG categories, but like a color-blind man playing with a Rubix Cube, they are making some unintended mistakes,” commented Netzly. “We want to help these companies excel even more by sharing our unique insight into the faith-based ESG investor population and the issues that are important to this passionate and influential demographic.”

Investors can view Inspire Impact Scores and other ESG data for the selected companies, as well as tens of thousands of stocks, ETFs and mutual funds for free with a simple ticker symbol search at inspireinsight.com.

 Engagement List

The list of companies selected for engagement in Inspire Investing’s Faith-Based ESG Investor Engagement Campaign 2020 are below:

*Note: Inspire and Inspire employees and affiliates may own shares of the below companies in portfolios and funds under management, including third-party and personal investment accounts. This is not an endorsement of, or recommendation to invest in, the companies named herein. Not investment advice.

Click name of company to view Inspire Impact Score data on inspireinsight.com.

AllianceBernstein HoldingHomeStreet Inc
Alnylam PharmaceuticalsLenovo
AMC Entertainment HoldingsLionsgate Entertainment Corp
American Electric PowerLowe’s
AMN Healthcare ServicesLuby’s
ANGI Home ServicesLululemon Athletica
Apollo Global ManagementMitsubishi UFJ Financial Group
Avis Budget GroupMonster Beverage Corp
Big LotsMyriad Genetics
BJ’s RestaurantsNiSource
Booking Holdings IncNoble Energy
Burlington StoresNomura Holdings
Byline BankOmnicom Group
Cincinnati BellPandora
Comerica IncorporatedPapa John’s International
Consolidated EdisonPDC Energy
Designer BrandsPeople’s United Bank
DocuSignPPL Corp
Dollar GeneralQurate Retail
Domino’s PizzaRegions Financial Corp
Dunkin’ BrandsSarepta Therapeutics
Fiat ChryslerSpirit Airlines
First Commonwealth BankSun Life Financial
Flushing Financial CorporationSyros Pharmaceuticals
Gates IndustrialViaSat
GenescoWaste Management
Georgia Power CompanyWolverine World Wide
Groupon 

 

About Inspire Investing

Inspire Investing is a leading provider of faith-based ESG investments and creator of the globally recognized Inspire Impact Score™ which is used by investors around the world to measure the biblical alignment of their investments according to Biblically Responsible Investing (BRI) principles. For more information, visit www.inspireinvesting.com.

Media contact:
Eric Smyth
(831)382-6572
inspire@inspireinvesting.com

Our Own Worst Enemy – Seven Key Tactics for Preventing Investment Missteps

For what I want to do I do not do, but what I hate I do.

Romans 7:15

In my own Christian walk over the decades, one of the biggest challenges in my life has not necessarily been the issue of knowing the right thing to do, but rather actually doing that right thing which I already know! The Bible often references this disconnect between “knowing” and “doing.” In Matthew 26:41, we read the oft quoted “The spirit is willing, but the flesh is weak.” Similarly, Romans 7:15 insightfully notes “For what I want to do I do not do, but what I hate I do.”

This propensity to know the right thing to do, but to do otherwise manifests itself when investing as well. Our piece, Matters of the Heart, discusses the pitfalls of emotion-based investing. The relatively new field of Behavioral Finance is predicated on the thesis that investors make sub-optimal decisions due to a number of common psychological tendencies. These behavioral shortcomings cause investors to make imprudent investment decisions, oftentimes enthusiastically buying at high market levels and despondently selling at low market levels. Investors find themselves doing the exact opposite of what they know they should do…buy low and sell high. In other words, Behavioral Finance teaches us that even when investors know the right thing to do, they oftentimes do otherwise. Sounds like something we might read in the Bible, yes?!

Behavioral economist, Dr. Richard Thaler, winner of the Nobel Prize, refers to people who always make rational economic decisions as mythical “Econs,” who do not really exist in real life. Real, flesh and blood humans, Thaler contends, are subject to emotions, biases, heuristics, etc. which cause us to make decision-making errors that Econs would never make. Benjamin Graham, the legendary economist, investor, and professor (Warren Buffett was his student!), summed up the challenge well, “The investor’s chief problem – and even his worst enemy – is likely to be himself.”

There are several key Behavioral Finance mistakes that investors make. With a) Loss Aversion, investors mistakenly overweight the pain of potential losses while underweighting the benefit of potential gains; b) Anchoring causes investors to cling to prior reference points, vainly longing for things to return to “normal” or to get back to “even,” while failing to adapt to changed market conditions; and c) Recency Bias, investors extrapolate the latest market direction, up or down, far into the future. While being finite does not mean being sinful, the limitations that behavioral finance identifies in all of us provides an opportunity for greed and fear to take advantage of our finite nature.

So, given that the Bible as well as the field of Behavioral Finance teaches us that, as humans, we are predisposed to do those things that we know that we should not do and to not do those things that we know that we should do, what measures can investors take to mitigate these behavioral errors, especially during these anxiety-provoking Pandemic times?

  1. Make a Written Plan – In our piece, What’s The Purpose?, we discussed the importance of an investor first determining the specific financial goal(s) in order to achieve a successful investment outcome. To increase the probability of achieving those financial goals, experts agree that having a specific, written plan to accomplish that goal(s) is critical. Then, referring back to that written document on a regular basis (e.g. quarterly), affords investors a helpful, consistent reminder to counter fluctuating emotions in the midst of market moves.
  2. Hire an Advisor – Certainly, hiring a financial advisor provides very important knowledge and expertise for investors. However, even beyond that, a financial advisor can serve as an important “personal trainer” that helps investors overcome bad habits and poor decisions. Also, an advisor can be an “accountability partner” to whom one must explain a significant financial decision before taking action. This can help keep investors from being swept up in market bubbles or panics.
  3. Automate – Investors should seek to systemize their investment activities as much as possible so that emotions do not affect their investment decisions. Automatic contributions to a retirement plan from one’s regular paycheck is a good example of a way to overcome behavioral finance weaknesses. Dollar Cost Averaging (DCA) is a systematic way to take emotions out of play by deploying a given dollar amount into investments on a predetermined schedule. Dollar Cost Withdrawals (DCW) does similarly for taking money out of investments. Likewise, a set rebalancing plan (calendar or percentage based) is an unemotional way to trim back investments at relative highs and redeploy the proceeds into other investments near relative lows.
  4. Employ Values-Based Investing – When investors see their investments as not only a means to achieving financial goals, but also goals of a “higher calling” (e.g. Biblically Responsible Investing), they are less likely to get caught up in bouts of market euphoria or despondency. When investors view their investments as “dual-purpose,” they are more likely to maintain a longer term perspective in the midst of gyrating emotions.
  5. “Bucket” Investments – The Behavioral Finance concept of “mental accounting” describes the financial mistakes people make by categorizing money into differing accounts and not considering wealth implications holistically when making decisions. This tendency, however, can also be used advantageously in the investor’s continuing fight against fear and greed. By separating investments into two categories of 1) “preserve wealth” (lower risk, lower return investments) and 2) “grow wealth” (higher risk, higher return investments), investors are more likely to maintain a long term investment strategy, even in the face of feelings brought on by market volatility. In Bear Market To Do List, we discussed the importance of having 6 to 24 months of living expenses held in safe, low-yielding cash, savings, or money market accounts in order to weather short-term market turbulence.
  6.  Utilize “Insurance” – Employing a strategy of rolling, deep out-of-the-money put options on broad equity indices can function like an insurance policy to help shield investors against catastrophic investment losses. This empowers investors to pursue a more prudent long-term investment strategy. Like insurance, however, this peace of mind does come with a deductible (the amount the put option is “out-of-the-money”) as well as the on-going cost of the premiums that must be paid to maintain the protection.
  7. Reframe Time Periods – The typical investor’s financial goals are measured not in days, weeks, or months, but rather years, decades, and generations. Therefore, while it is nearly impossible in our present-day, always-connected world to drown out the noise of financial market news, investors are well-served to commit to reviewing their investment portfolio’s performance only on a scheduled basis (e.g. quarterly). Further, in order to mitigate impulsive decisions, past investment performance should be viewed as long term only (five years or more, if available) and on a cumulative basis rather than annualized.
Dr. Erik Davidson, CFA

Dr. Erik Davidson, CFA

Dr. Erik Davidson, CFA, is the Chief Economic Advisor for Inspire Investing. Previously, Dr. Davidson served as the Chief Investment Officer for Wells Fargo Private Bank, overseeing more than $200B in assets. Dr. Davidson holds a doctorate degree from the DePaul University’s Kellstadt Graduate School of Business with his research focus in Behavioral Finance.

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*Advisory Services are offered through CWM Advisors, LLC dba Inspire, a Registered Investment Adviser with the SEC. All expressions of opinion are subject to change. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Investors should talk to their financial advisor prior to making any investment decision.

Ill-Wind Investing: Prudent or Profiteering?

As the Covid-19 crisis began to accelerate, my colleague proudly told me that he profited from buying Zoom stock. Another one of my friends boasted that he had made money selling short the stock market. Hearing these stories made me recall the words of the father from East of Eden, “Boys go out, and some die…do you think I could take a profit from that?”

“Boys go out, and some die…do you think I could take a profit from that?”

During late March, in a dark alley near Costco, there was a man selling toilet paper at marked-up prices. Seeing this man stirred in me two opposite reactions: anger for profiteering from other people’s suffering, and admiration for a man who was able to create a viable business model that both feeds his family and serves the community.

Which emotion should I feel when people make money from a pandemic: anger or admiration?

Ill-wind investing refers to making money on the account of “ill-winds” that sweep through a community, such as natural disasters, wars, or pandemics (Irvine, 2002). Is it morally wrong to make money from ill-winds?

Is it morally wrong to make money from ill-winds?

One simple way to argue against ill-wind investing would be to say that any activity that makes a profit from the suffering of others is morally wrong. While this may sound like a crystal clear rule to follow, it actually gets murky very quickly. For example, receiving an inheritance from an aunt who greatly suffered from Leukemia would be an example of a morally justified profit from the suffering of another person. Other murky examples include doctors who profit from ruptured spleens or boxers who receive money from knocking out their opponent.

Is it morally wrong to buy Zoom stock, short the stock market, or sell toilet paper at marked-up prices during a pandemic? One way to form a moral principle around this type of ill-wind investing would be to ask the question, “does this activity increase, have no effect, or diminish the suffering of others?” (Irvine, 2002).

Does this activity increase, have no effect, or diminish the suffering of others?

Regarding the Zoom stock, one could argue that it either has no effect, or actually diminishes the suffering of others. It is a good thing when the company of a needed product receives an increase in its stock value. Zoom’s access to capital, then, increases, helping the company expand its service to those in need.

Regarding shorting the stock market, one could argue all three cases. It may diminish the suffering of others by being a vehicle for greater price discovery. Price discovery, over a long period of time, helps to avoid destructive stock market bubbles. However, it may increase the suffering of others by encouraging a stock price drop that goes beyond price discovery. A stock market crash could then cause a panic that would cascade into business layoffs and premature retirement withdrawals.

Regarding selling toilet paper, it may diminish their suffering by being a provider of a needed commodity when every other provider, who is trying to be “fair,” has no more supply. It also may potentially increase the suffering of others by emptying the pockets of those who are at their most vulnerable financial state (perhaps unemployed, or furloughed).

Given that ill-wind investing is morally complex, Biblical wisdom, Holy Spirit discernment, and counsel from others is required. It is important to be fearful about making money from an event that is causing others to suffer. It is also important to look for ways to share any profit that is made with those who were not as fortunate.

“Your abundance at the present time should supply their need, so that their abundance may supply your need, that there may be fairness. As it is written, ‘Whoever gathered much had nothing left over, and whoever gathered little had no lack.’” 2 Corinthians 8:14-15, ESV.

There is a story about a man who would walk a mile to work everyday. His one mile walk was his favorite part of the day. One day he happened to look down at a gutter and found a five dollar bill. The man was so thrilled about finding the five dollar bill, that the next day he couldn’t help but peer into every gutter on his way to work. In fact, for the rest of the year, he spent most of his one mile walk staring at gutters.

Even if ill-wind investing is morally acceptable, if we do not watch our ways, we may actually spend our lives “staring at gutters” as we try and find ways to continue to make money from the ill-winds of global warming, pandemics, hurricanes, and droughts. And, if we are not careful, we may slip into a terrible place; namely, hoping that more ill-winds would happen so that we could make even more money.

If we are not careful, we may slip into a terrible place.

Investing is not just a matter of the mind and the wallet, but also of the heart and the community. When we invest in a business venture, it is important to consider the impact that it will have on our community and our hearts, as well as on our wallets. Do our investing opportunities diminish human suffering? When we invest, we should strive to enter into investing opportunities that bring about prosperity for both ourselves and our community.


REFERENCES

Irvine, W. B. (2002). Ill-Wind Investing: The Ethics of Wishing. Journal of Business Ethics, 35(1), 57–63. JSTOR.

Inspire Investing Meeting Needs Of Guatemalan Villagers During COVID-19 Pandemic

Inspire Investing Meeting Needs Of Guatemalan Villagers During COVID-19 Pandemic

Since 2018, Inspire has partnered with World Help and Hope of Life to adopt an impoverished village in Guatemala. The village of Colonia Tawayni, La Union is located high in the mountainous, remote coffee farming terrain of Guatemala and is accessible only by 4×4 vehicle on a hazardous dirt road. The village of 720 people, 450 of which are children, was in dire need of school and medical clinic repairs, clean water system improvements, and a church building for the recently converted believers to meet in and continue evangelism to their community.

Through investors choosing to invest with Inspire and align their investments with their faith, the project has been able to make rapid progress. The church build is completed, a clean water well established, and the school project is currently underway. However, the COVID-19 pandemic brought the project, and the entire country of Guatemala for that matter, to a screeching halt. The government ordered lockdown is so severe that people are not even permitted to leave their villages to buy desperately needed food and supplies.

Inspire recently received word that Colonia Tawayni had run completely out of food with no means to get more, and people were starving. Thankfully, our ministry partners Hope of Life received permission to take food to the mountain villages, including Colonia Tawayni. The need was so great, however, that even Hope of Life has run out of food to give as their food donation stockpile is being dispersed faster than it is being replenished.

For just $30, World Help is able to purchase, assemble and deliver a food care package that can feed a family of 2 adults and 4 children for 2 weeks (mask included of course, per Guatemala regulations). That means that for $9,600 we can feed the entire village of 160 families for one month.

Thanks to all of the institutions, advisors, and clients that are investing with Inspire, the Inspire Give50program has already been able to provide the entire village with 2 weeks of food to cover their immediate needs. Please be praying that this food gets safely delivered to the village, pray the Lord blankets his peace over these villagers during this frightening time, and pray that the virus subsides so the lockdown can be lifted. If you feel led, you can also donate directly to this food relief effort at this link here. $30 provides one family with food for a month and 100% of the donations are directed to this village through World Help.

How awesome is it that your investment account can be working toward your financial goals while also providing for the immediate needs of others during a desperate time?

Your investment dollars are hard at work!

$100M Ex-Ameriprise Team Says “So Glad” They Joined Inspire Advisors Christian RIA Platform

Father-son $100M team left Ameriprise after 25 years to join Christian RIA firm Inspire Advisors to align their practice with their Christian faith.

San Jose, California, June 2nd, 2020 – Keith and Jacob Chandler, the father-son advisory team now at the helm of Inspire Advisors’ Palmdale, CA office say the Christ-centered culture is a big reason they joined Inspire Advisors a little over a year ago after spending more than 25 years at Ameriprise:

“What we love about Inspire Advisors is that we can now be part of a company that truly reflects our values and mission. We love that we can be part of a team of Christian professionals whose desire is to display excellence in their work and inspire transformation for God’s glory throughout the world. We are so glad that we joined the Inspire Advisors team and are excited to see what the Lord has in store for this business,” says the duo who manage over $100m of assets.

“Welcoming Keith and Jake to the Inspire Advisors family over this past year has truly been a blessing,” commented Robert Netzly, CEO of the Inspire Investing family of companies. “They are consummate professionals and exhibit God-glorifying excellence throughout their practice. We are honored to serve them and their clients as we work together to inspire transformation for God’s glory throughout the world with biblically responsible investing and planning advice.”

Biblically Responsible Investing Focus

The Inspire Advisors platform is purpose built from the ground up to support Christian financial advisors who want to run their practices with 100% biblically responsible investing (BRI) alignment, a growing conviction among financial advisors and their clients.

“When we looked across the RIA marketplace we could not find any national-brand RIA platform that was dedicated to biblically responsible investing,” said Netzly. “That’s a problem that we are solving with Inspire Advisors. There has to be a top-tier RIA firm that is sold out to the advancement of biblically responsible investing and serving the Christian advisors who want to run their practices for the glory of God.”

Financial professionals that join Inspire Advisors have access to Inspire’s deep bench of biblically responsible portfolios delivered in a turn-key, separately managed account (SMA) format, including customizable unified managed account (UMA) and robust tax-loss harvesting capabilities.

There are currently several dozen SMA strategies available to Inspire Advisors recruits and their clients, with strategies ranging from passive, index based portfolios to actively managed, tactical, sector rotation and other strategies. Some strategies are built using Inspire’s popular suite of biblical ETFs, while others are built using only individual stocks and can be customized for individual practices or client needs, giving advisors one of the most robust, widely diversified selection of biblically responsible investing portfolios available anywhere.

Powerhouse Investment Team

Inspire Advisors touts a powerhouse investment team backing up their portfolios that gives financial advisors instant credibility with investors both large and small. Inspire’s investment committee is led by Chief Investment Officer, Darrell Jayroe, CFA, CFP, CKA, who has served in senior portfolio management positions for over 20 years. Inspire’s Chief Economic Advisor, Dr. Erik Davidson, DBA, CFA, previously served as the Chief Investment Officer at Wells Fargo Private Bank overseeing $200 billion in assets and a team of 400 professionals. Inspire Investment Analyst, Shane Enete, CFA, previously oversaw hundreds of billions of institutional assets at firms Meketa and Brandes Investments, and currently shares his time as Professor of Finance at Biola University and heads up Biola University’s Inspire Research Institute for BRI. Such a world-class team provides advisors and their clients with institutional-level portfolio management and expertise to invest with confidence.

Inspire Advisors is a sister company of Inspire Investing, a global leader in the biblically responsible investing industry, and leverages the size and scale of the combined organization. Together, the Inspire family of companies manages over $658M AUM as of May 29th.

Christian financial advisors interested in exploring a relationship with Inspire Advisors can email inspire@inspireadvisors.com or visit www.inspireadvisors.com to learn more.

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About the Inspire Investing family of companies

Founded in 2015 and headquartered in the Silicon Valley of California, Inspire Investing seeks to create meaningful impact in the lives of people across the globe by providing high quality, biblically aligned investments and financial advice that support Christian ministry and is a leading authority in the Biblically Responsible Investing (BRI) movement. For more information, visit www.inspireinvesting.com.

*Disclaimer: Investment advisory services offered through Inspire Advisors, LLC and CWM Advisors, LLC dba Inspire, both being Registered Investment Advisors with the SEC. CWM Advisors, LLC and Inspire Advisors, LLC are affiliates.

Media contact:
Eric Smyth
(831)382-6572
inspire@inspireadvisors.com


 
 
 
 
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Amazon.com Board Recommends Vote Against Viewpoint Diversity

In its recently released Notice of 2020 Annual Meeting of Shareholders & Proxy Statement, the Board of Amazon.com recommended that shareholders vote against a shareholder resolution on viewpoint diversity. The Board’s opposition suggests that an intolerant bias is alive and well in the leadership ranks of one of the world’s largest and most influential corporations.

The text of the proposed resolution, officially titled “ITEM 12—Shareholder Proposal Requesting a Report On Viewpoint Discrimination” located on page 41 of the document, states the importance of preventing discrimination based on religious, social or political views. If implemented, it would provide transparency to shareholders on the “range of risks and costs associated with discrimination against different social, political and religious viewpoints”.

The resolution reads as follows:

“Whereas, Shareholders of Amazon.com, Inc. (“Amazon”) invest in the company to receive maximum return on their ownership investment in Amazon, without the costs and risks associated with Amazon restricting specific social, political, or religious views.

Whereas, any decision by Amazon to either endorse or reject social, political, or religious views may alienate customers, harm the company’s reputation, and negatively impact business performance.

Whereas, the City of Seattle, the State of Washington, the United States, and several International Conventions prohibit discrimination against religious groups and beliefs, and the City of Seattle prohibits discrimination against political ideology.

Resolved: Shareholders request that Amazon issue a report, at reasonable cost and omitting proprietary information, evaluating the range of risks and costs associated with discriminating against different social, political, and religious viewpoints.”[1]

Amazon.com has taken great pains to portray themselves as champions of diversity, and have made public statements about their supposed commitment to respecting diverse viewpoints. For example, their website proclaims that  “diversity and inclusion are good for business—and more fundamentally—simply right.”[2]

AMAZON.COM DIVERSITY ONLY SKIN DEEP

This begs the question, if Amazon.com is such a believer in diversity, why would their Board recommend that shareholders vote against a resolution that would provide “a full evaluation of viewpoint bias and associated risks to ensure that Amazon is making balanced decisions and that it is acting consistent with its commitment to diversity?”2

The simple answer is because Amazon’s Board lacks diversity to the point that they cannot even see that a problem exists. On the surface, Amazon’s Board of Directors seems rather diverse: Of the ten Directors, five are women and five are men; there are two people of color; and they each have varied backgrounds in business, academia, law and so forth. However, this appearance of diversity is superficial. A look under the surface into the ideological perspectives of Amazon’s Board reveals a monolithically homogenous worldview committed to advancing a progressive-liberal political and social agenda.

An examination of the personal political contributions of each individual Amazon.com board member tells a striking story. Of all the independent board members who made non-corporate political contributions in the Trump vs. Hillary 2016 election cycle, all of them donated to liberal, Democratic Party candidates, Political Action Committees (PACs) or other liberal political action groups, according to data from campaignmoney.com.[3]

Prominent recipients of donations given personally by Amazon’s Board members included Hillary For America, Hillary Victory Fund, Friends of Schumer, Victory Now PAC, ActBlue, and the Democratic Senatorial Campaign Committee. No conservative groups. No Republican, Libertarian or Green Party candidates. Just one flavor of super-non-diversity.

AMAZON.COM VIEWPOINT CENSORSHIP

Plainly stated, the current Amazon.com “commitment to diversity” is only a commitment to embracing a progressive-liberal viewpoint about diversity. Conservative, mainstream perspectives are not welcome. Case in point, numerous well-regarded, socially conservative, faith-based non-profits have been officially removed from the “Amazon Smile” charity platform, preventing Amazon.com customers who want to donate to those charities through their Amazon Smile purchases from doing so.[4]

This charity censorship relies upon a list provided by an extremely partisan and discredited non-profit group operating under the misleading name “Southern Poverty Law Center”, or SPLC for short. The SPLC has been under intense fire in recent years as sexual abuse, racism and financial scandal has been exposed at the highest levels of the organization and reported in major media outlets across the nation.[5] Other organizations, such as Twitter,[6] the US Department of Defense, and the Federal Bureau of Investigation,[7] have ended their relationship with the SPLC because of their glaring moral and ethical failures, but not Amazon.com.

SHAREHOLDERS’ RIGHT TO TRANSPARENT REPORTING

Shareholders are not asking Amazon.com to somehow become a stalwart defender of conservative values. All they are requesting is that Amazon.com provide a transparent reporting on its stated commitment to diversity, something that the Board of Directors should be quick to embrace as it is their fiduciary responsibility to ensure the company is living up to its promises.

But, ironically, Amazon’s board is fighting against this resolution for viewpoint diversity put forward by the very shareholders they are supposed to represent.

To be clear, I believe Amazon.com has every right to use their corporate influence to promote whatever agendas they see fit, including progressive liberalism. But don’t try to hide it. If Amazon’s leadership is committed to a progressive-liberal agenda, then shareholders have a right to know about it, as well as the potential risks that position could cause by alienating customers who hold a different view. This is basic corporate responsibility. Denying shareholders material information that can affect their investment is not just bad-form, it is unethical.

Amazon.com shareholders should be pounding the table for access to transparent reporting on Amazon’s performance regarding viewpoint diversity or lack thereof, and the risks associated with that performance. If you are an Amazon.com shareholder, you have the right to cast your vote on “ITEM 12—Shareholder Proposal Requesting a Report On Viewpoint Discrimination,” and I would encourage you to exercise your right, no matter which way you vote.

[1] Amazon.com Notice of 2020 Annual Meeting of Shareholders & Proxy Statement: https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/updated/2020-Proxy-Statement.pdf

[2] https://www.aboutamazon.com/our-company/our-positions

[3] https://www.campaignmoney.com/

[4] https://www.christianpost.com/news/amazon-removes-conservative-legal-group-charity-smile-program-splc-hate-group-label.html

[5] https://www.newyorker.com/news/news-desk/the-reckoning-of-morris-dees-and-the-southern-poverty-law-center

[6] https://www.washingtonexaminer.com/opinion/op-eds/twitter-dumps-southern-poverty-law-center-stops-making-hate-pay

[7] https://www.christianpost.com/news/amazon-removes-conservative-legal-group-charity-smile-program-splc-hate-group-label.html