Socially Responsible Investing

IFA SRI Index Portfolios are screened to exclude:

• Companies that are engaged in the development or manufacture of abortifacients; own or operate acute-care hospitals or surgical centers; or own more than 20% of, or are majority-owned by, companies that meet the preceding criteria.
• Companies that derive at least 15% of revenues from; rental, sale or distribution of adult entertainment media products; ownership and/or operation of adult entertainment establishments and production of adult media products including movies, magazines, books, calendars and websites.
• Companies that derive at least 15% of revenue from the manufacture of alcoholic beverages, the supply of raw materials and other products necessary for the production of alcoholic beverages or the distribution of alcoholic beverages.
• Companies whose operations have had major recent controversies relating to child labor infractions in the US or abroad.
• Companies that derive identifiable revenues from the development or manufacture of contraceptives; or that own more than 20% of, or are majority-owned by, companies that develop or manufacture contraceptives.
• Companies that derive at least 20% of revenue from the production of goods used exclusively for gambling, such as slot machines; ownership and/or operation of casinos, racetracks, bingo parlors, or other betting establishments; or the provision of services in casinos that are fundamental to gambling operations, such as gambling technology.
• Companies that are involved in the production of anti-personnel landmines, anti-vehicle landmines, or the essential components of these products.
• Companies that derive at least 20% of revenue from the production and/or sale of military weapons or weapons systems; customized components for military weapons or weapons systems; or weapons of mass destruction, including nuclear weapons, nuclear weapons systems, and customized components thereof.
• Companies that conduct stem cell research with cells derived from human embryos or fetal tissue, use fetal cell lines in the development of vaccines and other biologics such as therapeutic proteins and gene therapy products, or develop or produce products for scientific research specifically on embryonic or fetal stem cells, such as technology that isolates or regulates the growth and proliferation of stem cells.
• Companies that conduct business in Sudan, including those that own assets in, have employees/facilities in, obtain goods/services from, or have distribution agreements in Sudan; that issue credits or loans to companies domiciled in Sudan; or provide goods/services to, or purchase goods or commercial paper issued by, the government of Sudan.
• Companies that derive at least 15% of revenue from the manufacture of tobacco products, production of raw materials and other products necessary for the production of tobacco products, or the distribution of tobacco products.

Investing for Catholics' socially responsible investmenting philosophy is firmly entrenched in a passive rebalancing investing strategy that maintains an ongoing screening process. The fund universe meets the following criteria:

• Passively managed, with an SRI monitoring process
• Style pure
• Low cost
• Conforms to index benchmarks that carry at least 20 years of statistical data demonstrating the risk (as measured by standard deviation of monthly returns) and return
• Conforms to the criteria for risk-appropriate tilts to specific markets as set forth by leading financial economists.

Investing for Catholics' process for evaluation, selection, and recommendation of investment managers is shaped by Investing for Catholics' extensive research into the areas of historical long-term investment success, with consideration to the tenets of Modern Portfolio Theory and the Multi Factor Model developed by Eugene Fama (recent winner of the first Onassis Prize in Finance) and Kenneth French. The findings that make up this important compilation of research reveal that returns are not the result of price speculation, but rather returns arise from a portfolio’s specific exposure to defined risk factors.

This sound reasoning provides support for the primary goal to capture market returns at minimal expense. This can be accomplished by abandoning efforts to beat the market and buy the market through risk-appropriate doses of index funds that are passively managed, style pure, low cost and are screened to adhere to socially responsible guidelines.