Brief description of Style
Faith based funds invest in line with specific religious principles (e.g. Shariah Law)
SRI approach applied
Faith based funds typically use negative ethical screening as part of their investment process in order to create funds that meet the requirements of a named religion or faith.
Decisions may be guided by an external committee or panel of experts or use specialist indices which list allowable constituents.
SRI issues covered
Funds invest in line with a set of policies that meet the needs of their intended clients. This may include, for example, the avoidance of the payment of interest, avoiding companies involved in pornography, gambling or alcohol – which are required by Islamic investors.
Variation across Style segment & associated Styles
There is little choice in this market at present as there are relatively few options available. Retail faith funds are mainly intended for Islamic investors although options may exist for other faith groups from specialist providers. Interpretation of ethical principles may differ.
NOTE: The ‘Faith Friendly’ filter option within the Fund EcoMarket ‘Other Features’ filter box is intended to help users find other potentially appropriate options.
Impact on investment strategy
Faith based exclusions may substantially impact where a fund manager can invest. Funds may use specialist benchmarks to gauge performance or guide investment decisions.
Who is this Style most likely to appeal to?
Faith based funds are primarily intended for investors who want to invest their money in line with a specific named faith – which primarily means Islamic investors who are looking to invest in line with Shariah principles.
These funds have features in common with some Balanced and Traditional Ethical funds some of which have their origins in the (e.g. Methodist and Quaker) Christian beliefs.
Please also see the ‘Faith Friendly’ filter option on Fund EcoMarket tool for other options that may suit investors with faith related investment aims, but which are marketed as ‘ethical’ options.
(Note: There is also now a movement of Catholic investors who are seeking to encourage more responsible investment strategies, although these may not be accessible to individual investors.)
Religious beliefs, personal values, Sharia funds/ Islamic Finance
Offered by very few fund providers