Morgan Stanley guide to investing with Christian Values

A Morgan Stanley report published earlier this year, Investing and Giving in Alignment with Christian Values: Blessed to be a Blessing, provides Christian investors with a helpful guide for taking 'a holistic approach to embracing their faith'. The guide focuses on the management of investments as an extension of faith and also includes thoughts on philanthropy.

We're pleased to see major investment firms such as Morgan Stanley providing such support for faith-based investors, which in the past has included a Catholic Values Guide and a Jewish Values Guide.

With our upcoming Forum on 4 December scheduled to cover Evangelical Christian Approaches to Faith-consistent Investing​ - with guest speakers from Sovereign's Capital - today's post will focus on the investment aspects of this most recent Morgan Stanley guide.

The guide describes three broad investment 'approaches' that Christian values-aligned investors might pursue:

1. Christian Values applied as a restriction screen to 'avoid harm' and 'screen out industries they find objectionable'. As we've frequently written about, this is a good - and very common - starting point for aligning faith values with investment.

2. Integration, which refers to the process of identifying specific companies that align well with certain values, e.g., having leadership that promotes human dignity or products or services that address solutions in line with Biblical values.

3. Thematic solutions that seek to invest in 'entities and industries deemed in line with Biblical values', such as companies that facilitate access to food and clean water, etc.

Applying the approaches above to the process of portfolio construction leads to other essential decisions the investor must make: as a partial, carve-out, or total portfolio solution.

Partial Portfolio Solution

'Where options exist that meet the financial and Christian Values objectives of the investor, these investments can be integrated into the context of a fully diversified portfolio that may include non-Christian Values integrated investments. In contrast to a total portfolio solution, a partial solution may be implemented by transitioning a portion of the overall assets, either by asset class or based on a catalyst such as an underperforming manager, to strengthen the mission alignment over time.'

Carve-Out Solution

'An investor may choose to have a portion of their assets aligned with their version of Christian Values—either the public equity/ public fixed income, alternatives or a diversified carve-out across all asset classes. This could be a specific amount or percentage allocation and creates a target and mandate that can be a great way for investors to start on their journey of mission alignment across investments.'

Total Portfolio Solution

'An investor can activate their entire portfolio based on their financial and Christian Values objectives. This may include utilizing mutual funds, exchange-traded funds and separately managed accounts that, to one extent or another, incorporate pre-defined positive and/or negative Christian Values into their investment discipline, depending upon the investor’s preferences.'

The proliferation of guides such as Morgan Stanley's come at a time of increasing investment options available to faith-based asset owners, which we wrote about recently in our post New faith-based funds, apps and screening tools. This is a very encouraging backdrop, but for each organisation it ultimately comes down to making the decision to pursue FCI and acting on it. We recognise that this is not always easy, which is why we are here to provide support with resources, educational programmes and services. Let us know how we can help! info@faithinvest.org

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