While faith-based investing may be the opportunity advisors are missing, nearly half of investors say they want to align their investments with their faith, but only 9% of advisors are starting that conversation.
Now new research does show that when advisors talk about faith-based investing, they can build stronger relationships and better meet client expectations.
So what is holding investors back and how can faith-based products serve everyday portfolios?
Well, joining me here at the New York Stock Exchange this morning.
Is Benjamin Bailey, VP of investments and senior fixed income investment manager at Praxis Investment Management.
Benjamin, great to have you here.
Thank you so much for joining me.
Oh, thanks so much for having me.
So first and foremost, when it comes to the Praxis Impact bond fund, give us an idea of how you're utilizing green and social bonds to drive impact right now.
Yeah, great.
So in the impact bond fund, one of the important things that we want to make sure that we're doing is to outperform the ag over market cycles.
And to make sure that we're also including green social and sustainability bonds into the same fund, we have about a third of the fund at this point is in those green social or sustainability bonds, these types of things that are making a really direct deep impact on the on the climate and also on the communities.
Yeah, and I think when it comes to impact investing, it's very important to understand the terminology.
So when we're talking about green and social, what Exactly are we talking about here?
Sure, yeah, so a green bond is something that has a direct influence on the environment.
So that could be a solar farm, a wind farm, it could be energy efficiency projects, but things like that can then be included in a green bond and then those things they'll do a report once a year telling you where that money went and the impact that was had with that.
Yeah, and speaking of report, we all know that data is key here to understand what's really going on.
So tell us about your recent research when it comes to faith-based investing.
Yeah, one of the things that we wanted to understand more is just the general marketplace and what percent or how many investors are really interested in faith-based investing.
What we found is there's a lot of them, which is great, right?
So when we did that commission that report, we found that about 50% of consumers or investors really were interested in faith-based investing.
And a lot of times advisors seem to be nervous about having that initial conversation to ask people, do you want to invest with your values or not.
So give us an understanding what does it actually mean when we're talking about faith-based investing and what does values actually look like?
Sure, yeah.
So in the praxis funds, what we're doing is faith-based investing and we have multiple parts of that.
So one of those is screening certain things out that could be alcohol, tobacco, gambling, pornography, whatever it might be.
But then we also want to do something more than just screening things out, so we're also going to be doing shareholder advocacy where we're going to work with certain companies to make sure that they're doing things in a way that will benefit them and will benefit the community and the climate also.
So there's multiple different parts.
We also include proxy voting.
We also include sustainability data in this process.
So each of these different things is what we talk about when we talk about. impact that you can have really when you're making these investments.
Yes, and why do you think advisers are hesitant to bring this up?
I think The idea of starting off this conversation and it might be something that could be slightly divisive, they're probably just nervous because if they feel like they've had a relationship with them and it's gone well, do they want to bring up something that might be divisive or something that they think could bring issues in the future?
But again, what we've Found is there's a lot of clients and there's a lot of people that really want to invest with their values.
It actually makes for a deeper relationship when people can find out that they can invest with their values and make an impact on the world, that combination of those things while they're still making an appropriate return, they love that.
Yeah, and finally, Benjamin, before I let you go, you recently launched two new funds, so how are they different from your existing ones?
Yeah, so PRXG and PRXV a large cap value and a large cap growth ETF.
So they're relatively similar to what we have in the mutual fund side, but they do have some key differences.
A couple of the differences would be that they are non-diversified, so it's easier to be able to do something and to To match the index in a closer way when they're less diversified, meaning that we can buy some of the positions in a similar size to the index.
I say that's one of the big differences.
Overall, what we found is that advisors are really interested in kind of different paths.
Maybe a mutual fund works for some people, but ETFs work really well for some other.
Yeah, we have less than 60 seconds here.
You're joining me on a day when we're looking at record highs for the major stock averages, the Dow, Nasdaq, S&P 500, even the Russell 2000.
So when it comes to the current environment, how does this affect impact?
Well, we think this, this environment is a positive right when you can have markets that are going up, when you have markets that are continuing to stay strong, that's a good reason why people might want to continue to invest in the stock market.
I mean, even bond yields are relatively solid too, right?
So there's different parts of the market and so.
You have this good feeling of good upmarkets and that's good and then you can also understand, you know, the impact that can be had and the mix of those two things is really what can benefit lots of people.
OK, Benjamin, well thank you so much for joining me today and thank you for sharing all of your insights.
Thank you so much.
My pleasure.
