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SRI/MRI/Whatever...It's a Gimmick (and an expensive one at that)



April 05, 2010 – Comments (2)

I learned over the weekend that a friend was a longtime investor in Ave Maria Mutual Funds -- America's Largest Family of Catholic Mutual Funds. This is your typical "socially responsible" investment vehicle, though Ave Maria calls their approaching MRI, or "morally responsible investing. Specifically, this means making "sound investments in companies that do not violate core teachings of the Catholic Church." As far as I can tell from looking at the holdings/prospectus, this means they avoid companies that perform/finance/fund abortions or contraceptives and all media/telecom companies because they facilitate the distribution of pornography.

Leaving aside the merits of this holdings philosophy and how well the company's holding actually do reflect Catholic teaching (though with former Notre Dame football coach Lou Holtz on their advisory board, how could it not?), the question as always to ask yourself as an investor is how much are they charging me to manage my money? (Incidentally, the Catholic-ness of their portfolio is determined by their advisory board and not by the Church itself, so they're pretty much the fox watching the hen house when it comes to making sure their investment decisions abide by Catholic teaching. Not saying they're interpreting Church doctrine incorrectly, but rather that this organization is not at all affiliated with the Catholic Church.)

For the flagship Ave Maria Catholic Values Fund (AVEMX) it's a stout 1.5%, including a 0.25% 12b-1 fee (which means you as an investor are helping them pay for their marketing!). This expense ratio, as you may have guessed, is both higher than its category average and almost 6x higher than the 0.27% you'd pay to own the Vanguard Mid Cap index (which is basically what this fund is tracking).

And what do you get (besides MRI) for this extremely high added cost? Well, according to Morningstar, the fund has lagged its category performance in every trailing time period (from 1-week to 5-years). Nice work team! < /sarcasm >

Expenses matter in investing, and the good people at Ave Maria are charging you some very stiff fees to guide your investments in a moral manner. At the end of the day, what they're doing does not seem to be worth their fees, and if you want to make sure you only invest in companies you believe in, you might just consider building a diversified portfolio yourself.

2 Comments – Post Your Own

#1) On April 05, 2010 at 3:22 PM, XMFRoyal (94.47) wrote:

And how about investing in a fund named "Hail Mary"? Does that inspire any faith in their approach?


They could just rename themselves "Long Bomb".



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#2) On April 05, 2010 at 3:31 PM, XMFHelical (< 20) wrote:

Does the fee include a tithe?  Do the fund managers and the directors tithe their incomes?  Just wondering.



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