The Performance of Faith-Based Funds

Mutual funds that invest in companies with products and policies consistent with the religious preference of their investors are often described as Faith Based Funds (FBF). The FBF, while having interesting differences, are essentially a subset of the more commonly known Socially Responsible Funds (SRF). While SRF screen investments primarily on secular social concerns, such as environmental or social, FBF scrutinize their investment choices to ensure that they satisfy the religious values of the faith groups that the funds serve. This paper compares the risk-adjusted performance FBF and SRF. In addition, the paper compares the risk-adjusted performance of SRF and FBF to the universe of U.S. mutual funds. Finally, the paper provides risk-adjusted performance measures for the two most common type of FBF – Christian and Islamic funds