September 12, 2003
Ave Maria Funds Promote Catholic Values Through Morally Responsible Investing
by William Baue
Ave Maria Mutual Funds, which screen abortion, pornography, non-marital partner benefits, and
Planned Parenthood contributors, represent another side of SRI.
Socially responsible investing (SRI) encompasses a diverse palette of investment philosophies that
run the gamut of social values. While most people associate SRI with progressive environmental and
social beliefs, the movement's foundation in ethics-based criteria means that the SRI umbrella also
covers more conservative ideologies.
Many SRI mutual funds reflect a specific
religious dogma. One such fund family is Ave Maria Mutual Funds, the largest and fastest-growing
Catholic mutual fund family in the country. In addition to the Ave Maria Catholic Values Fund
(ticker: AVEMX), the largest Catholic fund at $130 million in assets, the company also offers the
Ave Maria Growth Fund (AVEGX) and the Ave Maria Bond Fund (AVEFX).
"I consider our funds
morally responsible investing (MRI), a subset of SRI," said George Schwartz, president of Schwartz Investment
Counsel, the investment advisor for Ave Maria. "SRI funds are generally interested in criteria
such as environmental impact or the number of women on the board--most of the SRI funds are tree
"Some of them have positive screens for companies that have favorable employment
practices toward homosexuals," Mr. Schwartz told SocialFunds.com.
The Ave Maria Funds
operate from the opposite end of that spectrum, screening out companies that offer non-marital
partner benefits, regardless of whether they are same- or opposite-sex partners.
Catholic Advisory Board believes that marriage between a man and a woman is a sacrament instituted
by God, therefore when a company offers to put a non-marital union on par with marriage, it's a
slap in the face to the Catholic Church and such companies should be screened out," said Mr.
"Some Catholics are critical because we don't screen enough things out," he
For example, Ave Maria does not screen out companies such as Wal-Mart (WMT), Cracker
and Lockheed Martin (LMT). These companies have added
sexual orientation nondiscrimination to their Equal Employment Opportunity (EEO) policies.
The Catholic Advisory Board, which determines all four of the funds' screens, is chaired by
former Major Baseball League Commissioner Bowie Kuhn. Pro-family advocate Phyllis Schlafly and
former Domino's Pizza chair Thomas Monaghan also sit on the advisory board, and Cardinal Maida, the
Bishop of Detroit, serves as ecclesiastical advisor.
The funds' other three screens
include abortion, pornography, and contributors to Planned Parenthood.
Advisory Board feels that Planned Parenthood is an evil organization that promotes and finances the
murder of unborn children," said Mr. Schwartz.
Mr. Schwartz maintains that the screens do
not adversely affect the funds' financial performance. The Catholic Values Fund is up more than 24
percent so far this year, outpacing its benchmark, the S&P 500, by more than 9 percentage points,
according to Lipper.
"On a cumulative basis since the inception of the Catholic Values
Fund on May 1, 2001, we're up about 20 percent and the S&P 500 is down about 15 percent," said Mr.
The top three holdings of the Catholic Values Fund are Automatic Data Processing
Parts (GPC), and
Ross Stores (ROST). The top three holdings in
the Ave Maria Growth Fund, Eli Lily (LLY), Patterson Dental (PDCO), and Factset
Research Systems (FDS), will probably shift by the beginning of next year. Eli Lily, whose 11 main
competitors offer non-marital partner benefits, recently announced it would do so as well as of
January 1, 2004.
"If they do in fact implement the policy, we're going to have to sell
the stock on January 2," said Mr. Schwartz.
Ave Maria, which owns $3.5 million of Eli Lily
stock, wrote the company about its intention to divest.
"If we were the size of Fidelity
and owned ten percent of Eli Lily, maybe they would be more receptive to our protestations, but
since we only own a fraction of one percent, they didn't pay us much heed," said Mr. Schwartz.
Aquinas, the next largest Catholic fund family with about $150 million in assets in six funds,
practices shareowner action by purchasing shares in companies to persuade them to adopt policies
that uphold Catholic doctrine.
"That's the problem that Aquinas has; because they're
smaller than us, they're really fighting an uphill battle trying to get companies to change their
corporate behavior," concluded Mr. Schwartz. "It's a business model that we have not felt is worth