Houses of the Holy ETFs

The first few months of 2009 were marked with a collection of curious religion-oriented ETF pitches. Earlier this April, for instance, FaithShares Advisors filed with the SEC for funds streamlined to suit the lifestyles of specific Christian denominations. FaithShares anticipates featuring such ETFs as the Baptist Values Fund, the Catholic Values Fund, the Lutheran Values Fund or even the Methodist Values Fund in their revolutionary new breed of ETF.

The general trend of these financial enigmas is somewhat reminiscent of the "socially responsible ETFs," such as iShares KLD Select Social Index (KLD - commentary - Trade Now), or even possibly environmentally aware ETFs, such as PowerShares WilderHill Clean Energy (PBW - commentary - Trade Now) and PowerShares Global Wind Energy (PWND - commentary - Trade Now). However, the names of these funds can be considered somewhat misleading.

Most of the shares within these religious ETFs do not tie directly into their associated denominations. Instead, the ETFs gain their "religious" background through the underlying principle of actively avoiding investment in sectors deemed taboo within each respective denomination.

For example, the new Islamic fund launched by Javelin Exchange Traded Shares (JETS). This New Jersey-based company spearheaded the push for the Dow Jones Islamic Market International Index Fund (JVS - commentary - Trade Now), which corresponds to the investment return of specific "Sharia compliant" securities. The fund's name is derived from the term "Sharia," which is the body of Islamic religious laws covering (and specifying taboos within) many aspects of day-to-day life. For instance, the incompatibility of alcohol, conventional financials (banking, insurance, etc), gambling, firearms and pork within Islamic tradition leads the ETF to fiercely exclude any such companies.

The fund is currently trading on the NYSE Arca Exchange with an expense ratio of 0.68% and large holdings in companies such as BP (BP - commentary - Trade Now), Total (TOT - commentary - Trade Now), Novartis (NOVN - commentary - Trade Now), Roche and GlaxoSmithKline (GSK - commentary - Trade Now). The highest share, BP, only makes up 4.94% of the fund as of the end of the second quarter).

Overall, consider giving this new ETF (and potentially any other religious fund to hit the NYSE) a look. Religious affiliation aside, JVS invests in a well-diversified basket of equities, both on a national and industrial level.

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At the time of publication, Dion had no positions in the stocks mentioned.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.