The Papal Approach To Investing: A New Catholic Values ETF

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There are multiple ways to approach socially responsible investing. One approach includes faith-based investing and investors have a new option to consider in the Global X S&P 500 Catholic Values Index ETF (NASDAQ: CATH), which debuted Tuesday.

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The Global X S&P 500 Catholic Values Index ETF follows the S&P 500 Catholic Values Index, a subset of S&P 500 stocks that are aligned with Catholic investment values. That index "is designed to include the companies within the S&P 500 whose business practices adhere to the Socially Responsible Investment Guidelines as outlined by the United States Conference of Catholic Bishops (US CCB) and exclude those that do not. Given CATH's alignment with the S&P 500, it is intended to be used by investors for their US Large Cap exposure," according to a statement issued by New York-based Global X.

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In answering the logical question of how many S&P 500 companies jibe with Catholic investment values, it's a lot. Nearly 470 stocks are found in CATH, according to Global X data. Top 10 holdings look a lot like the traditional S&P 500, led by Apple Inc. (AAPL), Microsoft Corporation (MSFT) and Exxon Mobil Corporation (XOM).

CATH is slightly underweight consumer discretionary stocks and slightly overweight consumer staples names relative to the traditional S&P 500.

Not A New Concept

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The idea of faith-based investing is not new. There are about 20 such mutual funds on the market and the idea was applied to four ETFs targeting different Christian denominations in 2010, but the ETFs were closed in 2011.

One of the stumbling blocks for the old faith-based ETFs was an annual fee of 0.87 percent, which even in 2010 and 2011 was pricey among ETFs. CATH will not be afflicted with that problem as its expense ratio is just 0.29 percent, or $29 per $10,000 invested.

"People are becoming increasingly interested in investing their assets in a manner that is consistent with their beliefs, thereby contributing to the well-being of the human family," added Rev. Seamus P. Finn, OMI, in the statement. "This fund could be a welcome option for members of the Catholic faith to consider."

Last week, it was reported that Dow component JPMorgan Chase & Co. (JPM) took a passive stake in Global X. Terms of that deal were not disclosed.

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