INFOGRAPHIC: The 5 Most Inspiring Tech Stocks

Technology is great. Except when it isn’t.

Tech companies are great. Except when they aren’t.

Like many things, technology can be used for good or for evil. And like the technology they create and distribute, tech companies can be forces for good or for not-so-good. (There, see? I didn’t call tech companies “evil”.)

Biblically responsible investors are wise to consider the impact that their technology stocks are having on the world at large. In particular, tech companies can shine particularly brightly, or fail miserably, in areas of special concern such as supply chains (remember the FoxCon/Apple suicides?) and the environment (tech manufacturing can be a very dirty business).

So, which tech companies are doing the best job of adding positive impact to the world in line with biblically responsible investing values? See below for our picks of the five tech companies with the highest Inspire Impact Scores. To learn more about how biblically responsible investing based on the Inspire Impact Score can affect portfolio performance, read our post titled “Can Impact Investments Outperform?”.

Christians, Dirty Money & Financial Revival

I had no idea that I was making money from abortions. I also had no idea I was making money on the sale of pornography. But every time someone used an abortion drug or bought an X-rated movie from Amazon or their TV provider like AT&T, Verizon, Dish Network and DirectTV, I was making a cut of that profit. With God’s money.

I was just like hundreds of millions of other Christians in this world who have the wool pulled over their eyes by the great Babylon of Wall St. For some reason, it had never occurred to me that the companies that I owned in my mutual funds, ETFs and stock and bond portfolios were the very same companies that were manufacturing, selling and promoting the vilest products of immorality and unholiness that the depraved human mind can conjure. But there it was plain as day, the truth that I was ignorantly profiting from the nails in my Savior’s hands, the thorns on His glorious brow and the spear through His broken heart.

And most likely, so are you.

Take for example the most heavily traded index fund in the world, the SPDR S&P 500 ETF (ticker: SPY). This fund has $237.26 billion dollars in assets and trades an astonishing 18 million shares, or roughly $4.3 billion, per hour. Chances are that you are invested in this fund, or some other fund like it from Vanguard, iShares, American Funds or other company. The chart below shows the information that changed my life forever, and details exactly what owners of these funds are profiting from.

The question is, do you care?

Believe me, I know this is a difficult question to answer because the ramifications of “yes” mean a complete and total departure from the so-called financial wisdom of this world. My personal “yes” cost me all the financial security this world has to offer. And yes, I have also heard the attempts by some to sidestep this issue by saying that buying stock in the secondary market (as is done on the stock exchange, mutual funds, etc) does not actually support the company or give them any money. But they miss the point completely. The issue is not about some kind of financial boycott to withhold our money from “evil companies”, the issue is the unavoidable truth that as an owner of that stock, you and I are profiting from the most grievous of sins. Instead of “take no part in the unfruitful works of darkness, but instead expose them” (Ephesians 5:11), we are pocketing the cash in the name of the Lord.

Hear the merciful appeal of God in His holy word, “Do not be conformed to this world, but be transformed by the renewal of your mind…” (Romans 12:2). Set aside for a moment the questions and doubts of how to invest in a way that is not “conformed to this world”, and instead ask God to give you the faith to trust Him, to believe that His ways are better than our ways, whatever they may be. Ask your Lord to give you ears deaf to the commentators of this age who point fingers at you and yell “Fool! Bigot! Intolerant!”, but attentive to the voice from heaven that calls, “Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.” (Matthew 25:21)

Pray for personal, spiritual, financial revival.

-R


Robert Netzly is the CEO of Inspire Investing and frequent contributor on FOX, Bloomberg, New York Times and other major media. Read more from Robert in his #1 bestselling book Biblically Responsible Investing, available at Amazon.com and other major retailers.

Follow Robert on Twitter and LinkedIn and get inspired!

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Advisory Services are offered through CWM Advisors, LLC dba Inspire, a Registered Investment Adviser with the SEC.

CEO, Robert Netzly on BRI

What is BRI in 20 seconds

Reflections On Ringing The NYSE Closing Bell

Do you know what I was doing on Thursday, April 20th, 2017 at 4:00pm Eastern Daylight Time?  (I know…why should you care, right?)  Well, if you want to know, I was ringing the closing bell of the New York Stock Exchange along with the rest of the Inspire Investing team.  So crazy!  It was a dream come true, a completely surreal experience.  Have you ever had an experience like that?  Something so great that you float through it like a dream, the reality of it all only sinking in over the next several days after?  I hope you have.

[Watch the video of our bell-ringing on Facebook!]

With the bell ringing a few days behind me, I have had some time to ruminate on the experience and thought I would share a few reflections that could come in handy the next time you find yourself ringing the NYSE bell, or doing something even more important.

1) Bring people with you.

The New York Stock Exchange is quite a place.  The energy inside that building is frenetic and contagious.  The pomp and circumstance, the liturgy and ceremony of the bell ringing connects you to a rich history dating back hundreds of years, all the way back to the first trading sessions under the famed buttonwood tree and the amazing growth of a young America into the world’s most thriving economy.

Standing up on the podium, overlooking all of this with my finger on the bell button (yes, it is a button), is exhilarating.  They allow you 14 people up on that podium, and we packed it out.  The experience was infinitely more rich because I shared it with people I love and who love me: my wife, my business partners, and their wives.  We have labored hard and sacrificed much together to get to that platform.  I cannot imagine being up there all alone.  Next time you do something great, bring people with you.

2) Make it count for eternity.

No matter how great an accomplishment ringing the closing bell of the NYSE is, or whatever achievement you are celebrating, if it is just an earthly triumph it will not last and really doesn’t matter at all.  As the apostle Peter reminds us,

“All people are like grass,
    and all their glory is like the flowers of the field;
the grass withers and the flowers fall,
    but the word of the Lord endures forever.” (1 Peter 1:24-25)

Ask yourself how you can imbue your great deed with eternal significance.  If you don’t, then what have you really accomplished?  Nothing.  As Vernon Brewer, my friend and Founder/CEO of World Help (who joined us on the bell podium, BTW), says often, “Do something everyday that will outlive you and last for eternity”.  That is a great idea.

We brought eternity to bear in our bell ringing in a few different ways.  First, I preached a short message for our guests and NYSE staff on Matthew 5:13-16, letting your light shine, in the NYSE “Big Board Room” before the bell.  Second, we made sure to point people to God while we celebrated on the podium.  Third, we used the “tag the wall” tradition (where bell-ringers get to write on the wall in the stairwell just behind the bell podium) to share the eternal hope of Jesus through scripture.  All the previous bell-ringers just signed their name and date, like some grown-up financial version of a yearbook, but our team took that opportunity to write in permanent ink, indelibly in plain view of all future bell-ringers, verses of scripture and proclamations of God’s goodness and glory.  Why write our silly names when we could write something eternally profound?

Which leads me to my third and most important exhortation…

3) Give God the glory.

It is tempting to soak in the spotlight when the world shines it on you, but that is the biggest mistake you could ever, ever, ever make.  When people all over the world are telling you how great you are and how magnificent your accomplishment is, don’t fall for it.  Don’t buy the lie.  You are not great and you are not magnificent.  Sorry, but you’re not.  And I most certainly am not.

All you have is from God, who alone is sovereign over your successes and failures.  If there is anything good that you have done it is only because of the grace of God in your life — whether you believe in Him or not.  I am more keenly aware than anyone how incapable I am of doing anything good or noteworthy apart from the blessing of God.  I seek His grace each day, and ask desperately for His favor, because without it I am nothing and neither is our company.  And I pray fervently that I never make the mistake of King Nebuchadnezzar, who claimed for himself the credit for his great kingdom and was reduced to nothing until he acknowledged God as the source of his blessing.  (Read the story in Daniel 4:28-37.  It is a fascinating story of how “those who walk in pride he is able to humble” (v. 37), especially the greatest among us).

So, next time the spotlight shines on you, be a mirror and not a sponge.  Reflect the glory to God, who alone is worthy.  Only if you do that are you or I truly a success.

Blessings,

-R


Robert Netzly is the CEO of Inspire Investing and frequent contributor on FOX, Bloomberg, New York Times and other major media. Read more from Robert in his #1 bestselling book Biblically Responsible Investing, available at Amazon.com and other major retailers.

Follow Robert on Twitter and LinkedIn and get inspired!

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Advisory Services are offered through CWM Advisors, LLC dba Inspire, a Registered Investment Adviser with the SEC.

Invest Different.

Sir John Templeton, one of the modern world’s most successful and famed investors, once said, “It is impossible to produce superior performance unless you do something different.”

This concept of contrarianism, purposefully spurning the direction and decisions of the masses in favor of the road less travelled, is (ironically perhaps) embraced and espoused by investors far and wide.  The wisdom of contrarian investing lies in the fact that if you are doing the same things as everyone else, you will get the same results as everyone else, which by definition is unimpressingly average.  It then follows that if an investor is to reap an above average return that he or she must follow the advice of Sir Templeton and “do something different”.  In practice, most contrarian investors who follow Sir Templeton’s methods will apply this concept by searching out companies with strong financial fundamentals and low stock prices, the companies that the average majority are overlooking, diamonds in the rough.  Templeton became a billionaire following that precise approach, so it is not up for debate whether this approach can yield dramatically impressive results.

I wonder if this same contrarian approach can be applied successfully to the values of a company, and not just the value of the stock price?

In an age where so many in corporate America are wasting company resources and investor dollars chasing after liberal activist agendas, it is those quiet, conservative companies with traditional values which are truly doing something different.  Ironically, Apple (with their famously contrarian slogan “Think different.”) is a poster child for following the masses.  Instead of thinking different, it turns out they think like all of their peers, together raising a cacophony of corporate noise in support of politically popular issues that have nothing to do with their core business, and definitely nothing to do with increasing shareholder value.  For example, Apple squanders investor dollars supporting the liberal political think tank CAP and opposing religious liberty legislation, which apparently is a pet-project of CEO Tim Cook, who wrote in an op-ed to the Washington Post in March, 2015, “On behalf of Apple, I’m standing up to oppose this new wave of legislation — wherever it emerges.”  There was indeed a time when Apple thought differently, and over the past years investors in Apple have certainly been rewarded, but it seems that those years of Apple’s uniqueness have ended, and with it perhaps also their stock market dominance.

Instead of chasing the herd and investing in the crowd of companies entangled in progressive liberal activism, I think Sir John Templeton might instead suggest to seek out those companies who quietly go about their business with humble determination to do a good day’s work, to add value to their customers and share-holders and who do not conform to the pattern of this world, but instead represent love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control throughout their organizations.  These businesses of blessing are the kind of companies I want to invest in.  What about you?

Blessings,

-R


Robert Netzly is the CEO of Inspire Investing and frequent contributor on FOX, Bloomberg, New York Times and other major media. Read more from Robert in his #1 bestselling book Biblically Responsible Investing, available at Amazon.com and other major retailers.

Follow Robert on Twitter and LinkedIn and get inspired!

Image result for twitter logo Twitter.com/robertnetzly
Image result for linkedin logo LinkedIn: @Robert_Netzly

Advisory Services are offered through CWM Advisors, LLC dba Inspire, a Registered Investment Adviser with the SEC.

Merits Of Equal Weighting An Index

What is the best way to cook an egg?  Scrambled?  Fried?  Poached, perhaps?  That is, of course, an impossible question because the correct answer is completely dependent on what you want the end result to be.

The same is true with index construction.

What is the best way to build an index?  Market cap weighted?  Sector weighted?  Equally weighted?  Or maybe one of the other myriad smart-beta strategies prevalent in the market today?  The right answer depends completely on what you want the characteristics of your finished product, in this case the index, to be.  Are you after lower volatility?  Higher growth?  Broader diversification?

Amid all of these potential strategies, it is one of the simplest, oldest, and elegant that quite possibly is also one of the most beneficial:  the equally weighted index.

In this paper written by Shane Enete, CFA, with Biola University’s Inspire Research Institute for Biblically Responsible Investing, you will be introduced to the history of indexing, how the “traditional” indexes came to be and why there might be a better way.

READ THE FULL PAPER HERE

Inspired Investing: An Introduction To Biblically Responsible Investing

Inspired Investing

An Introduction to Biblically Responsible Investing (BRI)

By Shane Enete, CFA

Assistant Professor of Finance, Biola University

Biblically Responsible Investing (BRI) is a growing movement among Christian investors and investment firms, with significant potential for cultural impact. BRI is an investing approach that seeks to ensure that a Christian is investing in a way that is consistent with the moral standards of the Bible. Is BRI a helpful  investment approach? Or just a marketing ploy meant to exploit?

As this paper will argue, BRI products, through their excluding, engaging and endorsing activities, help Christian investors maintain their integrity and responsibility to biblical stewardship while actively investing in the stock market.

Discovering BRI

There is a growing movement among Christian investors to align their investments with biblical values. This movement is called Biblically Responsible Investing (BRI) and it is on the rise. But is BRI just a marketing gimmick designed to prey on Christians who see the word, “Bible,” and automatically direct their money to it without any thought about investment prudence? The answer is clearly “no” when the implications of being a stock owner are fully understood.

Stock Ownership Is Business Ownership

In order to understand the implications of being a stock owner, it is good to define what stock ownership really means. “Shares of stock” are certificates of ownership that an investor receives in exchange for investing money in a corporation.

 

“If you are a stock owner, you are a business owner.”

Once a corporation receives money from investors, the corporation buys “assets” (e.g., machines, land, property, etc.). These assets are then “managed” by managers who receive a salary so that they will, hopefully, be able to generate a profit while managing those assets. This profit belongs exclusively to the stock owners

For example, if a lemonade company received $250 from an investor, the company would hire a manager to buy a lemonade machine and some lemons, which they hope will generate sales that are in excess of expenses (i.e., profit).

So, given that stock owners “own” the profits of a company, then this would mean that a stock owner is a residual owner of the business, effectively making a stock owner a business owner.

However, most stock owners either do not know they own businesses, or really do not believe this is true. Perhaps this is because, for most companies, there are millions of other stock owners, so it seems like each individual ownership claim is too insignificant to be an actual ownership claim. But that is not true: Ownership is ownership, whether small or large.

One of the clearest signs that a shareholder is a business owner is that shareholders are asked to vote on all important company matters. Shareholders receive voting packets in the mail every quarter, and to vote is to be counted as a member; or, put another way, to cast your vote means you have certain rights within that company
that you are exercising, which were given to you through stock ownership.

Shareholders also receive dividends, which are company profits. This is the most important part of being an owner: entitlement to the company’s profits. As a company’s assets generate profits, they accrue to the owners of those assets.

1 A Comprehensive Dictionary of Psychological and Psychoanalytical Terms

Losing Integrity

There is a certain pride in owning, and profiting from, companies that are making great products (e.g., automobiles) and providing great services (e.g., hospital care). But, what if a company is not acting in a way that an individual would deem “responsible to society”?

For example, what if an individual had a strong moral conviction that it is not responsible to society to slaughter cattle for meat consumption? It would not be a source of pride for that individual to accumulate the profits of McDonald’s. In fact, if this individual discovers that they own McDonald’s, and continues to accumulate McDonald’s’ profit, that individual will eventually lose their integrity.

Integrity is defined as “the quality of being whole or undivided; moral consistency; honesty and truthfulness.”1  integrity comes from the word, “integer,” as in, whole number. When a person loses integrity, they become fractured; they are no longer a whole number.

One of the big psychological consequences of losing integrity is the gradual erosion of our sense of self.2

Many investors are at risk of losing their integrity.

The moment of truth comes when, as business owners, they actually look at what businesses they own. At that point they will need to make decisions about whether they want to continue to profit from certain companies that violate their internal sense of morality or stay true to their moral convictions. For example, a third-party values-based screening company, evaluator, recently released a list of 77 companies that directly fund Planned Parenthood.3

Many of these companies are members of the S&P 500 index, which means that the vast majority of investors in the world own at least a few of these companies. If an investor believes strongly that abortion is the destruction of human life, then to willingly receive the profits from companies that are helping fund abortions is evidence that this investor’s sense of self is eroding since they are not acting in a consistent way with their internal convictions. Another example would be Microsoft and their video game division, which sells three games that have graphic nudity. If an individual has a strong moral conviction that pornography harms society and they own shares in Microsoft, they are actually helping to finance the production of pornographic content, and sharing in the profits as well.

2http://www.docdreyfus.com/psychologically-speaking/integrityrelationships-and-your-mental-health-part-2-of-3/

3http://evalueator.com/download/77_Companies_Funding_Planned_Parenthood-LD.pdf

4 Games include: “Ryse: Son of Rome” (2013), “Fable III” (2011), “Fable II” (2008).

Strong Moral Convictions

So, what is an investor supposed to do? If the investor has weak convictions about moral issues, then there is not much that needs to be done; this investors’ integrity is not threatened by questionable corporate activity. But, if an investor has strong moral convictions, action should be taken. And for a Christian, action must be taken.

A Christian has a strong sense of moral conviction that is derived from the words of the Holy Bible. The Bible lays out a way of life that is considered “life and light” (i.e., truth) and, also, a way of life that is considered “death and darkness” (i.e., untruth). A Christian of high moral convictions will seek to “walk in the light” while “fleeing the darkness.” The loss of integrity would be the greatest for the Christian who has the strongest ideas of what is good and true, and does not act in accordance.

Or put another way, because light and darkness are well defined by the Bible, the Christian who acts in a way that is inconsistent with the truth that they know (i.e., taking the profits from a company that is profiting from abortions), will be the most at risk of losing integrity.

But, the reason to act for a Christian is not simply to maintain their integrity, it is to honor their Lord and Savior and their responsibility to Him to manage His assets according to His will for His glory.

The Owner of All Things

One of the truths set out in the Bible is that the Creator of the Universe, God, actually is owner of all things.

“Thus says the LORD: ‘Heaven is my throne, and the earth is my footstool; what is the house that you would build for me, and what is the place of my rest? All these things my hand has made, and so all these things came to be, declares the LORD. But this is the one to whom I will look: he who is humble and contrite in spirit and trembles at my word.'” Isaiah 66:1-2, ESV

This adds another layer to the investing conversation, because they are also stewards (i.e., managers) of what God owns. If this is true, a Christian that invests God’s money in a company that produces pornography has acted as a very bad manager, doing the very thing that God would not want to do with His money. If this is happening with the Christian’s full knowledge, there is a fundamental failure of that Christian’s Biblical stewardship responsibility — they are not acting like a good steward.

Therefore, when a BRI product helps a Christian take seriously their role as steward of God’s money through a combination of divesting, engaging and endorsing, that BRI product is serving the investor in a very meaningful way.

Besides protecting a Christian investors’ integrity and sense of biblical stewardship, the BRI product is also able to serve culture in a positive way. BRI gives Christian investors the opportunity to use their ownership influence to bring about positive cultural change. Many corporations take public (and non-public) stances on cultural issues such as abortion and gay marriage.

Many such corporations take these positions not because they are actually passionate about the cause, but rather because a special interest group is lobbying them and they think it is a good business decision to promote that cause. BRI provides a voice. This voice becomes more able to get the attention of corporations as more Christians invest in BRI products.

The BRI movement has already produced some important cultural changes in recent years, a few of which are listed below:

  • Exxon ends abortion philanthropy (2013)
  • Home Depot ends corporate LGBT activism (2014)
  • Hilton removes pornography from their hotels (2015)
  • Abercrombie and Fitch eliminates sexualized marketing (2015)
  • Chevron ends abortion philanthropy (2015)

1 A Comprehensive Dictionary of Psychological and Psychoanalytical Terms

Taking Action

Biblically Responsible Investing products are constructed in a way that is consistent with biblical truth. These products achieve a “consistency” with biblical truth by doing at least one of the following three things:

  1. Endorse companies that are acting especially consistent with biblical truth.
  2. Engage with companies that are acting in ways not consistent with biblical truth through shareholder activism, with the hope of changing the company’s behavior.
  3. Exclude companies that are acting in ways not consistent with biblical truth. It is important to note that many BRI investment products attempt to do a combination of all three of these activities, and excluding, engaging, and endorsing are, in many ways, complementary activities.

1) Endorse

One of the most fulfilling aspects of BRI is to reward companies that are especially living out biblical truth in how they operate by investing in their stock. What does it mean to live out biblical truth well? It is more than just avoiding what is “bad.” It is acting out the greatest commandment of the Bible, which is “to love God and love your
neighbor as yourself.”(5) Currently, the desire to endorse companies “loving God and their neighbor well” expresses itself in two different ways in the investment marketplace: (i) Impact Investing, or (ii) Best-in-Class Investing.

 

(i) Impact Investing

The first expression, known as Impact Investing, focuses on making investments that will specifically help to solve a social or environmental problem.

Examples of impact investments include:

  • Xylem (ticker: XYL), a publicly traded water infrastructure company, seeks to ensure that the world, particularly the poor, will have adequate access to water through the use of their technologies. Their vision is that they will use their technology, time and talents to help advance the “smarter” use of water.
  • A EUR 150 million European private equity fund invests between EUR 2-10 million in companies that provide clean electricity to rural communities in developing countries with limited access to energy.
  • A $65 million U.K. fund invests in a Fair Trade and organic-certified coffee cooperative located in Ecuador.

For more examples of impact investing, ImpactAssets 50 provides a selective list of 50 investment management firms that are engaged in impact investing and what they are doing.6

 (ii) Best-in-Class Investing

This second expression of endorsing companies “loving God and their neighbor well” is called Best-in-Class Investing, which focuses on only buying the companies within every sector that are leading the way in social, moral, and environmental behavior.

For example, a “best-in-class” BRI product that is seeking to be excellent to the environment could still own an oil company, as long as they are endorsing the oil company that is the most environmentally friendly, and, through their support of that company, encourage the rest of the industry to improve their environmental policies.

2) Engage

While selling (i.e. divesting) “what is bad” is the most common reaction by Christians to owning companies that violate Biblical truth, “engaging” these companies should have a better chance of creating corporate change.

The most famous divestment movement in the U.S. was the divestment of all South African companies in the 1980s during the anti-apartheid movement. This movement resulted in hundreds of investors publicly divesting from South African companies in order to put public pressure on them to change their apartheid ways. Siew et al., (1999) study showed that, while there was a lot of publicity that resulted from this movement, there was no discernible impact on the market valuations of the divested companies.

All that appeared from this movement was that shares were exchanged from “investors of conscience” to investors who were more morally neutral. Therefore, while divestment may be the most natural response to owning morally controversial companies, many BRI investment products have chosen to engage corporate management of these companies before divesting in order to see if they might first change their behavior.

Some examples of successful shareholder engagement (also known as shareholder advocacy):

  • In 1997, a Christian shareholder of General Mills, Kleinbrook, discovered that the company had been directing corporate money to Planned Parenthood. Instead of simply divesting General Mills (ticker: GIS) stock, Kleinbrook organized investors and put enough pressure on management to change their policy.7
  • In 1999, Home Depot announced that they would phase out sales of products made from woods harvested in old growth forests. This happened after about three years of shareholder dialogue. During that time a series of meetings between environmentalists, concerned shareholders, and management took place.8 In 2015, Hilton announced that they are no longer going to offer pornographic films in their hotels in response to pressure from Christian investors.9

Interestingly, the majority of shareholder engagement today is by faith-based investors (see pie-chart).

6 http://www.impactassets.org/publications_insights/impact50
7 Naber, Mary (2006), “Christ’s returns,” Christianity Today; Sep 3, 2001; 45, 11; ProQuest pg. 78
8 Domini, Amy (2001), Socially Responsible Investing, Dearborn Trade, 2001
9 http://christianwm.com/inspire-mission/hilton-says-no-more-pornography/

3) Exclude (i.e., Divest)

The most common BRI products simply exclude companies from their portfolios that are not consistent with biblical truth, and for the investor who does not have the time or expertise to endorse or engage, this is a valid method of upholding biblical values and maintaining integrity as a Christian.

Investment products centered around divestment are nothing new; in fact, this practice is as old as stock investing itself. As early as 1696, the Quakers advocated against investing in the slave trade through such companies as the Dutch East India Company, which being founded in 1602, was the first company ever to issue shares of stock.10

In the U.S., the Pioneer Fund Group established a fund that refused to invest in companies that were involved in alcohol or tobacco as early as 1928.

Subsequent divestment movements (e.g., anti- Vietnam War, anti-apartheid in South Africa, anti-Sudan, anti-greenhouse gases) have created an ample amount of investment products for investors seeking to invest in the stock market while also avoiding areas of moral controversy.

Typical BRI products will screen out companies which support or profit from the following issues: abortion, pornography, LGBT activism, human rights violations, anti-family entertainment, alcohol, tobacco, gambling.

Some investment products also include additional issues, such as environment, weapons, and corporate pay.

For a quick reference of the prevalence of corporate support for unbiblical issues such as these, see the table above, which lists a sampling of large U.S. companies (from the Dow Jones Industrial Average Index), showing how many of them are engaged in activities that are not consistent with biblical truth.

While this list may seem discouraging, the good news is that the overwhelming majority of publicly traded stocks pass biblical screening criterion.

Violations such as illustrated below are mainly concentrated in the largest companies, while small and mid-sized companies tend to be much less egregious as a group. In addition, even within the large company space there are still plenty of options: out of the 500 stocks in the S&P 500, 247 pass biblical screening criterion.11

10 Bohoslavsky, Juan P. and Jernej Letnar Cernic (2014), Making Sovereign Financing and Human Rights Work, Bloomsbury Publishing, pg. 324

11 Source: Inspire Large Cap Impact Indexpg. 324

Common Questions

While BRI is an attractive proposition for most Christians, there are a couple common questions that give some investors pause:

  1. Does BRI deliver lower returns due to a restricted investment universe?
  2. Are there an adequate number of BRI investment options available to invest prudently with sufficient diversification?

Question #1: Does BRI mean lower returns?

A common objection to BRI investing is that an investment strategy that divests large amounts of companies from the investable universe will limit their ability to earn a reasonable return. The rationale for this fear is that by reducing the possible investment opportunities, it is likely that many good investment opportunities will be missed. However, through numerous research papers over the last 10 years, this objection does not appear to hold up.

Revelli, C. and Viviani, J.-L. (2015), who conducted a meta-analysis of 85 studies and 190 experiments of other studies, concluded that there was no compelling evidence that various “sustainable and responsible” investing methodologies drove return performance in either a positive or negative direction relative to nonrestricted peers. A few specific examples of these studies include: Goldreyer and Diltz 1999; Statman 2000; Bauer et al. 2005; Bello 2005; Benson et al. 2006.

These studies have been done for investment products labeled “socially responsible,” which includes “biblically responsible” investments as a subset, and counter the fear that a portfolio that restricts its investable universe will automatically have lower returns. The empirical data shows that performance is not hindered by “sustainable and
responsible” investing methodologies, including BRI.

Question #2: Are there enough BRI options to build a good portfolio?

While it is easy to convince a Christian that owning a company that violates Biblical conviction threatens their integrity and sense of Biblical stewardship, it is less easy providing the appropriate bridge to a BRI solution. Are there enough BRI solutions for investors to invest prudently? While there are certainly more “non-BRI” solutions than BRI solutions, there are sufficient options in the marketplace for an investor to create a well-diversified BRI portfolio.

New BRI investment options are becoming more prolific as part of the overall trend toward responsible investing. As the graph on the next page illustrates, sustainable and responsible investing in the United States is growing
exponentially, rising 76 percent between 2012 and 2014 to represent a total of $6.57 trillion of investment capital. This trend is expected to continue in the years ahead, which will help build the supply of BRI products and services available to Christian investors.

However, as the supply of BRI products have grown, the risk of buying a BRI product that is not actually Biblically responsible has gone up as well. For that reason, a “Certified BRI” standard has begun to be developed but it is still in the nascent stages. As such there is still a need for investors to do their homework to make sure the funds they are considering for investment actually do live up to the BRI label.

This can be accomplished by using BRI screening technology that will provide investors a “moral audit” report on their investments, detailing the violations present in the investment being screened. At least one firm, Christian Wealth Management, offers this service free of charge to investors at www.christianwealthmanagement.com.

That said, while there are a significant amount of BRI products available to investors in the open marketplace, there are very few situations where a BRI product is made available to investors housed in their company’s 401(k) or 403(b) retirement accounts. A company’s 401(k) or 403(b) retirement offering tends to have limited investment options. For most employees in a retirement program with their employer, they can only choose from one of a
few possible mutual funds, which are likely not BRI products. There are two possible solutions to this problem for an employee seeking BRI options: divest or engage. The first solution, divesting, would involve an investor liquidating all of their company’s retirement assets and going outside of their company to invest in BRI products. While this is a viable solution, it is not an ideal solution; tax deductibility and company matching for all employee contributions would be lost given this solution.

What about employers, and Christian employers in particular? How can they respond to the requests of their employees for BRI retirement plan options, and more importantly, fulfill their stewardship of God’s resources in their company retirement plan? Thankfully, along with the boom in the BRI trend, new options are opening for employers desiring to implement BRI in their retirement plans, along with others which have been available for some time. For instance, Timothy Plan mutual fund company (www.timothyplan.com), has been providing their funds inside of 401(k)s and 403(b)s since the 1990’s. In fact, the company itself was founded originally to meet the need for biblically responsible retirement plans for pastors. 

A relatively new solution is being provided by Inspire (www.inspireinvesting.com), which has pioneered low
cost, index based BRI portfolios. Inspire delivers a turn-key, low cost retirement plan solution to employers both large and small, leveraging the latest technology to bring a broad variety of indexes and strategies into the retirement plan market, as well as endowment management and individual investors.

Concluding Thoughts

Employees “engaging” employers is an alternative solution to the lack of BRI investment products. This would mean employees voicing an opinion that there is a need for BRI investment options within their investment choices. The current investment options that are available to employees are the result of previous investors requesting a change.

For example, over the last 20 years, employees, through their active engagement, have expanded the current options available in most retirement accounts from large, actively managed U.S. stock funds, to a wide variety of small and large domestic and international funds that are both actively and passively managed. This engagement has also resulted in the widespread adoption of “socially responsible” funds, such as those focused on helping
the environment. With effective engagement, biblically responsible funds can also find their place in 401(k)s on a massive scale.

By “engaging” their employers, a Christian employee can maintain integrity and uphold biblical stewardship, even with owning controversial companies, with the hope that they will improve the current system. However, once engagement proves to be fruitless, the former, divestment option, is likely the next best solution for a Christian of strong moral conviction.

Inspire Impact Score Methodology