Impact investment firm Inspire Investing has launched two passively managed ETFs designed to invest in companies aligned with biblical values – the Inspire Global Hope Large Cap ETF (NYSE: BLES) and Inspire Small/Mid Cap Impact ETF (NYSE: ISMD). The funds use a rules-based selection methodology to provide exposure to firms providing a high positive impact on society including those delivering clean water projects, human trafficking relief efforts, Bible distribution, and humanitarian relief for refugees in the Syrian crisis.
Inspire Investing has pledged a portion of the fees charged on its ETFs to the Christian ministry.
The ETFs are driven by the Inspire Investing’s Impact Score methodology, which filters publicly available data points related to thousands of companies globally to help investors identify companies which adhere to the Certified Biblically Responsible Investing (BRI) standards, an industry benchmark measuring alignment with biblical values. The model goes further by ranking the eligible companies according to their positive effects on customers, communities, workplaces and the world.
BLES tracks the Inspire Global Hope Large Cap Equal Weight Index, a reference for the performance of 400 of the most inspiring large cap companies from around the globe. Inspire defines “large cap” as a market capitalization of $10 billion or greater. The index is rebalanced to a weighting comprised of 50% US, 40% international developed, and 10% emerging market companies on a quarterly schedule. Each firm receives an equal weighting as of the rebalance date.
ISMD tracks the Inspire Small/Mid Cap Impact Equal Weight Index, comprised of 500 of the most inspiring small and mid-cap companies listed in the US, as determined by the Inspire Impact Score. The index is comprised of 50% mid-cap (with market capitalizations between $2 billion – $3.5bn), and 50% small-cap companies (with market capitalizations between $1bn – $2bn). Firms are also rebalanced to an equal weighting on a quarterly schedule.
Each fund has a total expense ratio (TER) of 0.61%.
To further boost the funds’ social impact, Inspire Investing has pledged a portion of the fees charged on the ETFs to the Christian ministry.
“At Inspire, we’re dedicated to having a meaningful influence in the lives of people all over the world through investing in inspiring companies, engaging with firms to encourage alignment with positive business practices, and giving generously from our corporate profits,” said Robert Netzly, President and CEO of Inspire Investing. “Good values and good returns are not mutually exclusive. Inspire ETFs allow you to join the growing movement of impact investors supporting worthy causes while maintaining the potential for above average investment returns.”
Research from Christian University Biola, commissioned by Inspire Investing, found that applying the Inspire Impact Score methodology of security selection had resulted in higher investment returns when compared to similar non-screened, broad market benchmarks. The findings illustrate that investors do not have to sacrifice return in order to choose socially-responsible investments.
Netzly stated: “Biola University’s recent study proves that it was possible to invest responsibly with biblical values and potentially earn above average returns. Evangelical Christians control approximately $13.7 trillion of the assets in the US and our hope is that this data will encourage more of those assets to get involved in impact investing so we can all share a brighter future together.”
The ETFs are not the first to align their strategies with Christian beliefs. In April 2016, Global X launched the Global X S&P 500 Catholic Values Index ETF (Nasdaq: CATH), which invests in US large cap companies whose business practices adhere to the Socially Responsible Investment Guidelines as outlined by the United States Conference of Catholic Bishops.
The index’s methodology screens out companies with revenue exposure to operations that do not meet Catholic values by analysing each firm’s financial statements on a quarterly review basis. These activities include abortion, adult entertainment, biological and chemical weapons, contraception, nuclear weapons, stem cell activity, and the use of child labour. Those that survive the screening process are subsequently weighted according to their free float market capitalisation.
It has a TER of 0.29%.