This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Top-Returning Funds That Follow Religious Guidelines

NEW YORK ( TheStreet) -- Religious groups have long designed mutual funds. Besides seeking to offer competitive returns, the portfolio managers shun certain kinds of offending stocks. Protestant funds avoid alcohol and gambling companies, while Catholic managers shy away from businesses that facilitate abortion. According to Morningstar, the faith-based funds have $30 billion in assets.

Because religious managers face limitations, you might expect these funds would deliver uninspiring returns. In fact, a number of the faith-based funds have recorded sizzling results.

Among the leaders is Amana Funds, which follow Islamic laws. During the past 10 years, Amana Trust Growth (AMAGX) returned 10.9% annually, outdoing the S&P 500 by 4 percentage points and topping all large growth competitors, according to Morningstar.





In the same period, Amana Trust Income (AMANX) returned 10.8% and surpassed 99% of its large blend peers.

Other faith-based funds that have finished near the top of the standings include Ave Maria Rising Dividend (AVEDX), a Catholic choice, and Protestant winners such as Thrivent Diversified Income Plus (AAHYX) and Timothy Plan Large/Mid-Cap Value (TLVAX).

Do the religious screens boost returns? Not necessarily. In a study of Islamic funds, Andreas Hoepner, a researcher at the University of St. Andrews in Scotland, found that most portfolios lagged their benchmarks. According to other researchers, the average Protestant and Catholic funds have produced unexceptional results.

Still, there is no evidence that the screens hurt performance. Portfolio managers say they are able to find good stocks that survive the screens.

Instead of using their own employees to manage portfolios, many of the top-performing faith-based companies have excelled by hiring outsiders known as subadvisors. The subadvisors often work for a variety of clients, including institutional investors and wealthy individuals who don't necessarily apply religious screens.





A top fund that uses a subadvisor is the Timothy Plan Large/Mid-Cap Value, which has hired Westwood Management. Led by chairman Susan Byrne, Westwood has operated Westwood LargeCap Value (WHGLX) and other funds that focus on companies with strong cash flows and little debt.

By seeking undervalued stocks that are improving their balance sheets, Westwood has excelled in downturns. The recipe has succeeded at the Timothy Plan fund, which has returned 8.5% annually during the past 10 years, outdoing 96% of large blend peers.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,122.56 -50.12 -0.29%
S&P 500 1,990.55 -3.74 -0.19%
NASDAQ 4,524.9220 -2.7670 -0.06%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs