How are indices helping market participants align investments with their beliefs? Get to know the S&P 500 Christian Values Screened Index and explore the faith-based investment landscape with Bountiful Financial's David Friedman and S&P DJI's Abigail Etches and Blake Spivey.
[TRANSCRIPT]
Michelle Yu:
Hi, everyone. Welcome to Asset TV.
Have you ever thought about how indices are helping market participants align investments with their beliefs? Well, we're going to discuss that and explore the newly launched S&P 500 Christian Values Screened Index. It's the result of a unique collaboration between S&P Dow Jones Indices and Bountiful Financial.
And joining me for a closer look at the index and the faith-based investment landscape are Abby Etches and Blake Spivey from S&P Dow Jones Indices and Bountiful Financial's David Friedman.
Now, before we get into the details of the index itself, I want to begin with the bigger picture here. Recent research estimates that Christian church members in the U.S. own over USD 22 trillion in investments, but the actual figure that is currently estimated to be in faith-based investments is much smaller. So, first, I want to get into the historical roots of faith-based investing, how it has evolved, and where the market stands today. And, with that, Blake, hello, welcome. Let's begin with you.
Blake Spivey:
Thank you. Faith-aligned investing has actually existed for quite a long time. We've seen early faith communities align their investments with their values for quite a long time. Even before values-based investing became a term within modern finance. We can actually point back to the 18th century where Quakers would avoid businesses that were morally incompatible with their own individual beliefs. Fast forward to today, we have an institutional-quality, governance-driven index that allows investors to make informed decisions as they align their conscience and their capital together.
You referenced earlier a USD 22 trillion market. We see about USD 100 billion right now in a growing market. But, we recognize that growth opportunity is absolutely significant, as the total addressable universe is north of USD 22 trillion.
Michelle Yu:
Well, faith-based investing is certainly a thing, and we want to know what trends are shaping all this right now. So, David, with that being said, what is your vantage point on all of this?
David Friedman:
Yes, there are a few key trends driving the rise of faith-driven investing, and I would just say that faith, in general, faith is on the rise, and there's an ascendancy of faith. One of the reasons and the drivers that's propelling that is, values are important. And, everybody from an integrity standpoint is expressing the fact that their values should be aligned with everything they do. And, financial investments is just another piece of that.
So, now there's this drive toward aligning your portfolios with your values and your faith. There's a broader trend in the financial services industry where we're going from institutionalization of faith-driven investments to the private wealth side. So, this migration into the person in the pews, if you will, which is a huge impact.
And, then, on the technology side, there's a rise of what's called direct indexing. And, what that does is it really allows a financial advisor to create a bespoke portfolio in a way that they hadn't before, which then enables this whole drive for aligning your portfolio with your values.
Michelle Yu:
So, we're going to turn to the design and methodology of the S&P 500 Christian Values Screened Index. And, Abby, please walk us through this index.
Abigail Etches:
Of course, I'd be happy to.
We begin with the iconic and well-understood S&P 500 benchmark, and, to that, we apply a value-based screen using Bountiful Financial's Evangelical Christian Framework. We're using revenue as a proxy for business activities, and, to this index, we're excluding companies that are not consistent with what values Christian members of the Christian faith might have. So, for example, we're screening out the manufacturers of violent video games, alcohol production, tobacco production, the use of stem cells, embryonic stem cells in research.
And, then, we end up with a basket, a stock selection, that more closely resembles what a faith-based investor might be looking for. We end up with an index that reflects the sector weight of the parent index. And, this methodology is on our website and widely available.
Michelle Yu:
I think our audience is curious to know how does Bountiful define Christian values, and what role does governance play in all of this. David, give us your thoughts.
David Friedman:
We look to biblical principles and the lived experience of the faith community. We convene these advisory councils, which are a core part of the governance structure. These advisory councils represent a whole spectrum of theologians, asset managers. But, they're all people that represent the faith community itself and represent that lived experience. We take their input, and that has an impact around the framework. And, then, that framework is delivered to S&P Dow Jones Indices, which then maps it across their data, which has the impact to the index.
Blake Spivey:
And, governance is central to everything we're doing at S&P DJI. So, the Bountiful Framework, overlaid with the governance approach that we apply to our data, we think, makes a really robust index for investors to be able to make informed decisions.
Michelle Yu:
I think this is something that must mean a lot to Bountiful. Can you elaborate on what this movement means to you guys?
David Friedman:
Yes, this index is the culmination we see, and, also, a bridge, and even a catalyst, between the USD 100 billion and the USD 22 trillion. And, so, we're really excited here.
This is a flagship index, which really represents institutional recognition for faith-driven investment for the market and for the Bountiful team, as well. And, so, at a macro level, it represents the roadmap and the opportunity to scale, to everyone in the world who's a Christian, the opportunity to align their portfolio and their faith.
And, individually, for the Bountiful team, it's been a catalyst for each of us on our own spiritual journey and our partners and the people we work with. So, it's exciting.
Michelle Yu:
Well, David, thank you so much. I look forward to hearing so much more about this, as I think this is only the beginning of so many more layers to uncover on this topic.
And, thank you all for joining us here today. It's been such a great discussion, with a simple takeaway for market participants looking to align their values and investment. New tools are making it easier to express your views and align investments with your faith.
And, to learn more about the S&P 500 Christian Values Screened Index, please visit the link below.
I'm Michelle Yu. Thank you so much for watching Asset TV.
