Overseeing the prudent management of another’s assets is an enormous responsibility. But for Catholic organizations, the role of a fiduciary offers potential rewards that transcend year-end returns and investment results. Our experience shows that the integration of seemingly unrelated concepts—merging faith and finance—offers an excellent opportunity to achieve fiscal goals while living our beliefs in today’s modern and fast-paced world. We believe that integrating the core values of one’s faith with the practical realities of institutional investing is an enlightened approach to fiduciary responsibilities, and one we are called to by the Church.
Faith-based stewardship and conceptually similar practices are being adopted by legions of religious and secular institutions around the world. Consider that many mainstream institutional investors, such as California Public Employees’ Retirement System (CalPERS), Hermes Asset Management and Goldman Sachs, as well as many Catholic institutions, have realized the advantages of integrating environmental, social and corporate governance considerations into portfolio management and investing decisions to varying degrees. While some fiduciaries focus narrowly on next quarter’s portfolio returns, a Catholic fiduciary takes a broader view, seeking to achieve societal as well as financial returns.
Since the early 1970s, there have been hundreds of studies by academics and investment professionals analyzing the performance of socially responsible investing (SRI). In general, these studies have sought to answer two questions: Do SRI portfolios generally produce lower returns than non-SRI portfolios? Do SRI restrictions create uncompensated risk in a portfolio? The consensus view is SRI, as an isolated and independent variable, does not produce a statistically significant impact on portfolio performance over time.
CBIS’ more than 30 years of experience confirms this consensus view. For example, our CUIT Core Equity Index Fund, our screened S&P 500 Index tracking fund, returned 8.28% (net of fees) on average over the 18-year period from its inception in January 1995 through December 31, 2012. This compares with the S&P 500’s 8.52% return over the same period.