S&P DJI unveils S&P 500 Catholic Values Index; licenses to Global X Funds

Aug 19th, 2015 | By | Category: Equities

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S&P Dow Jones Indices (S&P DJI), a leading index provider, has launched the S&P 500 Catholic Values Index which has been designed to adhere to the socially responsible investment guidelines of the United States Conference of Catholic Bishops (US CCB).

S&P DJI creates Catholic values index based on S&P 500

The S&P 500 Catholic Values Index follows investment guidelines consistent with the Catholic Church.

This is the first Catholic faith-based index linked to the prominent S&P 500 benchmark and has been licensed to ETF provider Global X for product development.  

“Sustainable issues represent one of the most important cost and revenue drivers in the modern corporate world,” said Julia Kochetygova, Head of Sustainability Indices at S&P Dow Jones Indices. “By selecting stocks that comply with the US CCB, the S&P 500 Catholic Values Index aims to include companies with resilient business profiles by addressing the ethical challenges that can make a stronger investment case. We are excited to be working with Global X by licensing this new and innovative index to them.”

Father Séamus Finn O.M.I., Chief of Faith Consistent Investing at the Oblate International Pastoral Investment Trust, added: “I welcome the creation of the S&P 500 Catholic Values Index and support its specific selection rules. It is important that investors now have a representative measure of the performance of those S&P 500 companies that adhere to the Socially Responsible Investment Guidelines as outlined by the United States Conference of Catholic Bishops.”

Possible constituents are screened based on data provided by EIRIS, a responsible investment research provider, to exclude companies involved in activities perceived to be inconsistent with Catholic values as set out by the US CCB.

Index exclusions are determined based on the percentage of revenue generated from particular activities. Companies generating any revenue from adult entertainment content production, abortion, contraception, stem cell research, biological weapons, chemical weapons, cluster bombs, landmines, nuclear weapons, or child labour are excluded.  Companies generating 1% of revenue from re-selling adult entertainment, or more than 50% of revenues from military sales, will also be excluded.

The exclusion criteria are reviewed on a quarterly basis for all companies in the index. Any index constituent that is deemed by EIRIS to be involved in the prohibited activities to an extent greater than the revenue thresholds is removed from the index at the quarterly rebalancing.

The index is market cap-weighted and, as of 31 July 2015, comprised 448 constituents. This indicates a solid level of diversification and coverage of the parent S&P 500 index. As such, it can be expected that the index should track the S&P 500 reasonably consistently. It should be noted, however, that considerable outperformance by excluded companies would lead to the underperformance of the Catholic index when compared to the S&P 500.

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