Institutional Investing


10 Reasons Why Your Institution Should Hire Investing for Catholics

Investing for Catholics is an Implemented Investment Consultant, offering the following significant benefits:

10 Reasons Why Your Institution Should Hire Investing for Catholics

  1. Investing for Catholics analyzes 82 years of risk and return data for global asset class indexes to establish an asset allocation model that is in keeping with the goals, objectives and risk capacity of the institution.

  2. Investing for Catholics accepts fiduciary obligation for fund selection, recommendation, implementation, monitoring and rebalancing for investments that are fully transparent at all times.

  3. Investing for Catholics implements passive investments that are style-pure, properly benchmarked, globally diversified and very low cost.

  4. We will implement the IPS (and trading) on behalf, of the institution and accept responsibility for such.

  5. Investing for Catholics identifies fund managers who incorporate a filter in keeping with the USCCB’s Guidelines for Socially Responsible Investing.

  6. We can also direct shareholder proxies and file shareholder resolutions for institutions  wishing  to elevate to this level of responsibility.

  7. Investing for Catholics is an associate member of the Interfaith Center on Corporate Responsibility (www.ICCR.org), an industry-leading international organization that holds corporations accountable through shareholder activism. This relationship provides Investing for Catholics the necessary research and data to enact shareholder activism at the request of its clients.  

  8. Father Seamus Finn, Board Member of the ICCR serves as our ecclesial consultant. He is widely known for his pivotal role in challenging the big five investment banks for transparency regarding the risks associated with their derivative investments, as well as his call for accountability and responsibility for upholding human dignity and labor standards in third-world countries.

  9. Investing for Catholics works with Nobel Prize winner Harry Markowitz, widely regarded as the Father of Modern Portfolio Theory. Professor Markowitz serves as an Academic Consultant to the firm. Investing for Catholics uses Modern Portfolio Theory including the work of Eugene Fama and Kenneth French and many empirical studies to guide its selection of funds and asset allocation construction. The following studies are particularly relevant:

    • Harry Markowitz, “Portfolio Selection,” Journal of Finance (1952)
    • William Sharpe, “Capital Asset Prices - A Theory of Market Equilibrium Under Conditions of Risk,” Journal of Finance (1964)
    • Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, “Determinants of Portfolio Performance,” The Financial Analysts Journal (1986)
    • Eugene Fama and Kenneth French, “The Cross-Section of Expected Stock Returns,” Journal of Finance (1992)
    • Eugene Fama and Kenneth French, “Common Risk Factors in the Returns on Stocks and Bonds," Journal of Financial Economics (1993)
    • Eugene Fama and Kenneth French, “Size and Book-to-Market Factors in Earnings and Returns, ” Journal of Finance (1994)
    • John Graham and Campbell Harvey, “Market Timing Ability and Volatility Implied in Investment Newsletter’ Asset Allocation Recommendations,” National Bureau of Economic Research Paper #4890 (1995)
    • Eugene Fama and Kenneth French, “Value versus Growth: The International Evidence, ” Journal of Finance (1998)
    • Laurent Barras, Olivier Scaillet, Russ Wermers, “False Discoveries in Mutual Fund Performance: Measuring Luck in Estimating Alphas,” Journal of Finance, Forthcoming.
    • Amit Goyal and Sunil Wahal, “The Selection and Termination of Investment Managers By Plan Sponsors,” Journal of Finance, Forthcoming
    • Scott D. Stewart, CFA, John J. Neumann, Christopher R. Knittel, and Jeffrey Heisler, CFA, “Absence of Value: An Analysis of Investment Allocation Decisions by Institutional Plan Sponsors,” Financial Analysts Journal (2009)

  10. Investing for Catholics’ approach is consistent with the American Law Institute’s “Restatement of the Law, Trust, Prudent Investor Rule.” The rule has been passed into law in 42 states. In 1992 The American Law Institute published Restatement of the Law, Trust, Prudent Investor Rule. This is meant as a guideline for the prudent management of trust assets.

In 1995, the National Conference of Commissioners on the Uniform State Laws adopted the Uniform Prudent Investor Act as a guideline for states to create their individual laws. It has been made into law in many states. In California it became law in 1996 under the title of the Uniform Prudent Investor Act. (Also see here.) This rule points out the value of Modern Portfolio Theory. It essentially tells trustees that index funds are the prudent way to invest trust assets. The rule acts as a legal road map for estate planning attorneys, trustees of all types of trusts, and investment advisors.

The Reporter's Notes to the Prudent Investor Rule point out the problems with active management (emphasis added).

"Economic evidence shows that from a typical investment perspective, the major capital markets of this country are highly efficient, in the sense that available information is rapidly digested and reflected in the market prices of securities. As a result, fiduciaries and other investors are confronted with potent evidence that the application of expertise, investigation, and diligence in efforts to 'beat the market' in these publicly traded securities ordinarily promises little or no payoff, or even a negative payoff after taking account of research and transaction costs. Empirical research supporting the theory of efficient markets reveals that in such markets skilled professionals have rarely been able to identify under-priced securities (that is, to outguess the market with respect to future return) with any regularity. In fact, evidence shows that there is little correlation between fund managers' earlier successes and their ability to produce above-market returns in subsequent periods."

To learn more, call 949-428-0432 or email.