Investment principles and strategies of faith-based funds

Purpose – To examine the rationale for the investment principles adopted by faith-based funds from a biblical perspective and to evaluate the performance of faith-based ethical funds. Design/methodology/approach – A multi-factor Carhart model is applied to examine the risk-adjusted financial performance and investment strategies of faith-based ethical funds. Findings – The statistical results indicate that the faith-based funds as a group do not under-perform the market on a risk-adjusted basis. Practical implications – This suggests that investment managers may incorporate moral/ethical components into their investment decisions without unduly shortchanging their clients for whom they have fiduciary duties. Originality/value – This is one of the very few papers which study faith-based funds.