FaithShares Catholic Values: The Only Catholic ETF Out There

So you've read my series on the US Conference of Catholic Bishops' investment guidelines and figured you are just a little too lazy to go through all of that research.  Or you've done all the research and made your picks (good for you!), but you wanted to hedge your bets and buy something that performs a little more like the market.  Well, do I have something for you!  It is the only Catholic ETF out there: the FaithShares Catholic Values ETF (Ticker: FCV).

First of all, if you don't know what an ETF is, the acronym stands for "Exchange Traded Fund".  What that means is it is like a mutual fund where it's run by a fund manager and has many different holdings, but it trades like a stock, where you can buy and sell it within fractions of a second on the open market.  There are also no sales loads, redemption fees, exchange fees, etc.  In other words, it's got all of the advantages of a mutual fund, but not many of the disadvantages.  It does have management fees, however, but really, what funds don't?

I did not feel like boring myself with reading its prospectus (you should if you're thinking about buying it), but I did take a peek at its fact sheet.  From there, I found out what their strategy is.  They take the 400 largest US stocks and apply a screen of them based on the USCCB investment guidelines.  This filters out a number of companies that violate the guidelines.  They then rank the remaining "good" companies based on the same USCCB guidelines.  Once they have a ranking, they take those stocks, and perform sector allocation so that the fund matches the MSCI USA Index, which, for all intents and purposes is equivalent to the S&P500 index.  In short, the FCV mimics the market but invests only in companies which have been screened for Catholic values.

Figure 1: FCV's Performance (Blue) Compared to That of S&P500

Looking at Figure 1, it appears FCV mimics the S&P500 index pretty well.  If you're looking for market returns but want to adhere to Catholic values, this ETF is for you!

I also looked at its top holdings and was quite happy to see 2 of my 4 holdings, Google (Ticker: GOOG) and First Solar (Ticker: FSLR).  My other two, Synaptics (Ticker: SYNA) and True Religion (Ticker: TRLG) were too small to even make it on the radar for the fund to consider.  I had written earlier that I was concerned by Google's leanings to the political left.  I had eventually worked that out and concluded that it was likely ethically acceptable to invest in Google.  I'm glad I've gotten confirmation here.  I will sleep well tonight!

Another thing to mention is that FaithShares donate 10% of the fund's net income to a Catholic charity/organization.  This is excellent!

Overall, I think this ETF is not a bad investment vehicle for those who are lazy, but ethically conscious, or for those who want to hedge their bets.  Do be aware that someone is making an investment decision on behalf of you, and he/she may be wrong!  Factor that into your investment decision.  Lastly, if you're not Catholic, FaithShares does have other Christian oriented ETFs as well.  Do check them out!

Some Recent Changes in My Portfolio

Finally got some time to update my trading history page.  Bought some Google and First Solar since end of April.

Google
Is there any indication that Google's business is declining?  There's one answer to that question: No.  The main reason is that the Internet is still growing.  According to Internet World Stats, the Internet's penetration of the world is still only at around 30%.  That's a long way to go to get to probably around 85%, where I think saturation will take place.

What's more important is that the Internet is reshaping the way the world operates.  Not only will the number of users increase over time, the amount of money to be made on the Internet will continue to grow.  For example, online video streaming is only in its infancy.  Think Netflix and Youtube.  They have been around for less than 10 years, and Blockbuster has become the first casualty.  I have no doubt that cable TV as it is will disappear in about 20 years.  People will still need to be entertained, but likely through some form of Internet service.  This is the megatrend of the 21st century, ladies and gentlemen.  By owning Google, you will be able to participate in this mega-growth!

First Solar
Renewable energy, another megatrend in the making.  First Solar is the lowest cost solar panel maker, and also one of the largest in the world.  Lots of profits and lots of cash, what more can you ask?  Thanks to the Japanese Tsunami, nuclear has lost its popularity as an alternative to fossil fuel power generation.  There will always be naysayers, but solar energy has already reached critical mass.  Again, own this company and you will ride the wave.

Do You Have the Guts?
Half of the battle is finding the courage to buy the right stock.  Anyone can feel good buying a stock that has just gone up 50%.  But those who make money are the ones who have the guts to buy a stock after it has gone down 50%.  Of course, you need to know that it's a good stock in the first place.  Warren Buffet opens his wallet most often during times of calamity, when stock prices are driven down.  You should learn to do the same.  In order to have the guts, you need to have the conviction that your picks are good.  Rule #1 Investing can help you do that.  Start your journey here.

Worried about the US Job Market?

Laugh all you will, but I like Jim Cramer.  I know he's a buffoon sometimes, but he's entertaining, and I also think he's actually very talented.  He doesn't get the credit he deserves.  Here's a perfect example.

While everyone is worried about the US initial jobless claims number rising this week, he goes and takes a look at the situation from another angle.  He looks at the results of Paychex, a provider of outsourced payroll services.  He noted that the "cheques per client" metric is up this year, which indicates that employers are continuing hiring rather than laying off people.

I appreciate this kind of out-of-the-box thinking.  You don't necessarily need to look at the widely used economic indicators to find out what's going on.  Sometimes they are not that accurate.  I've come up with my own indicator for retail companies using Google Insights.  I talked about it here.

In any case, take a look at what Cramer's got to say...