Investment Firm S&P Creates 1 New Christian Values Index

In a significant move catering to the growing demand for values-aligned financial products, the globally recognized investment firm S&P Dow Jones Indices has announced the launch of a new benchmark: the S&P 500 Catholic Values Index. This development signals a deepening integration of faith-based principles into mainstream financial markets, offering a new tool for investors who wish to ensure their portfolios reflect their moral and ethical convictions.

The creation of this index by a powerhouse like S&P underscores the maturation of the Environmental, Social, and Governance (ESG) investing landscape, which is increasingly branching out to include specific faith-based criteria. For years, investors have sought ways to avoid profiting from industries that conflict with their beliefs, and this new index provides a clear, standardized benchmark to guide those decisions.

Understanding the S&P 500 Catholic Values Index

At its core, the S&P 500 Catholic Values Index is a subset of the broader S&P 500, one of the most widely followed equity benchmarks in the world. However, it is not a simple copy. The index applies a set of exclusionary filters to the parent S&P 500, removing companies whose business activities are deemed inconsistent with the social teachings of the Catholic Church. These guidelines are based on the principles outlined by the U.S. Conference of Catholic Bishops (USCCB).

The primary goal is to provide a performance benchmark for investment managers and a basis for passive investment products, such as Exchange-Traded Funds (ETFs) and index funds. This allows investors to track the performance of large-cap U.S. stocks that align with Catholic values, without having to conduct the complex, company-by-company research themselves. It offers a transparent and rules-based approach to faith-based investing.

The Role of a Leading Investment Firm in Index Creation

An investment firm like S&P Dow Jones Indices plays a pivotal role in the financial ecosystem, not by directly managing money, but by creating the tools that others use to do so. Their primary function is to design, calculate, and maintain indices. These indices act as barometers for market segments and as benchmarks against which the performance of active fund managers is measured.

The process of creating a specialized index like the Catholic Values Index involves several key steps:

• Defining the Universe: The starting point is a broad, well-established index, in this case, the S&P 500.
• Establishing the Rules: S&P collaborates with experts, in this case likely consulting with theological and ethical advisors, to translate the USCCB guidelines into quantifiable, objective screening criteria.
• Data Collection and Analysis: The firm then uses extensive data from third-party research providers to screen every company in the parent index against the established rules.
• Index Construction and Maintenance: Companies that fail the screens are excluded. The remaining stocks form the new index, which is then rebalanced periodically (e.g., quarterly or annually) to ensure it continues to reflect both the market and the values-based criteria.

S&P’s reputation for impartiality and rigorous methodology gives the index credibility, making it a trusted foundation for financial products that an asset management or investment firm might create for the public.

The Screening Process: Aligning Investments with Faith

The effectiveness of any values-based index hinges on the quality and integrity of its screening process. For the S&P 500 Catholic Values Index, this involves a form of “negative screening,” where companies involved in specific activities are removed.

Based on the USCCB guidelines, the screens typically exclude companies with significant business involvement in:

• Weapons Manufacturing: Companies producing controversial weapons such as chemical, biological, and nuclear arms.
• Adult Entertainment: Production and distribution of pornography and other adult-oriented content.
• Contraceptives and Abortifacients: Firms involved in the manufacturing or distribution of products related to contraception and abortion.
• Stem Cell Research: Companies engaged in research involving embryonic stem cells.
• Child Labor: Firms with verified violations of child labor standards.

It is crucial to note that these screens are often based on revenue thresholds. A company might not be excluded if its involvement in a prohibited activity is minimal and falls below a predefined percentage of its total revenue. This pragmatic approach acknowledges the complexity of modern global corporations.

The Growing Demand for Faith-Based Investing

The launch of this index is not happening in a vacuum. It is a direct response to a powerful and growing trend among retail and institutional investors. According to a report by financial research leader Morningstar, funds that incorporate faith-based criteria have seen a steady inflow of assets over the past decade. Investors are increasingly viewing their capital as a tool to enact positive change and avoid complicity in activities they find morally objectionable.

This movement extends beyond just Catholicism. There are numerous indices and funds based on Islamic (Sharia-compliant), Protestant, and other faith-based principles. Each has its own unique set of screens, reflecting the specific values of its target audience. What they all share is the foundational belief that investment decisions can and should align with personal ethics.

By providing a high-profile, S&P 500-linked product, this new index makes faith-based investing more accessible and visible than ever before, potentially attracting a new wave of investors who were previously unaware or underserved.

How Investors Can Access Products Based on the Index

An important distinction for investors to understand is that you cannot directly invest in an index. An index is a list of stocks and a set of calculations—it is a concept, not a tangible asset. However, you can invest in financial products that are designed to track it.

Following the launch of the S&P 500 Catholic Values Index, investors should watch for announcements from asset managers and ETF providers. These firms will likely license the rights to the index from S&P and create funds that seek to replicate its holdings and performance. An investor could then buy shares of a “Catholic Values ETF” just as they would any other stock through their brokerage account.

To participate, an investor would typically:

1. Consult their financial advisor to determine if this strategy fits their overall financial plan.
2. Search for ETFs or mutual funds that explicitly state they track the S&P 500 Catholic Values Index.
3. Review the fund’s prospectus to understand its fees and specific strategy. For more on ETFs, see our guide on what an ETF is and how it works.
4. Purchase shares through their preferred brokerage platform.

The Future of Values-Based Indices

The creation of the S&P 500 Catholic Values Index is a milestone that points toward a more personalized and principled future for investing. As data analysis becomes more sophisticated and investor demand for customization grows, we can expect to see an proliferation of specialized indices from S&P and other firms.

This trend may also exert a subtle but persistent pressure on corporations. When large pools of capital begin to screen companies based on specific ethical criteria, it creates a financial incentive for companies to align their business practices with those values. While one index alone may not change the world, the cumulative effect of the entire values-based investing movement could foster greater corporate responsibility over the long term.

For the modern investor, the message is clear: the tools to build a portfolio that reflects not just your financial goals, but also your deepest convictions, are becoming more powerful and accessible every day.