Oklahoma financial advisers ask: What would Jesus do?

Two Oklahoma City financial advisers are launching five stock funds aimed at attracting Christians seeking investments that don’t conflict with the tenets of their faith.

FaithShares Trust, established by Tom Phillips and Garrett Stevens, will offer shares of exchange traded funds based on indexes that track recommendations of organizations representing Baptist, Catholic, Lutheran, Methodist and nondenominational Christian groups. The funds will include large-cap stocks, excluding those that conflict with core beliefs of the various denominations.

Stevens said the five portfolios will avoid "sin stocks,” particularly "the big five: alcohol, tobacco, gambling, pornography and the defense sector — mainly nuclear weapons.”

Each of the five indexes will include 100 large-cap stocks, and about 90 companies probably will be the same in each portfolio, Phillips said.

"But the 10 percent that are different are important,” he said. "In the same way that denominations have a basic faith in Jesus Christ, and then they have their own ways of worshipping and the tenets of their faith, it’s the differences on the edge that make the difference in the denominations. It’s the same in our ETFs.”

For instance, the index designed for Baptists will invest no money in companies that produce alcohol of any kind, Phillips said. For Catholics, companies that make beer and wine are allowed, but not those that produce distilled alcohol, he said. The Methodist fund will not invest in any company that produces more than 10 percent of its revenue through alcohol production.

While conventional wisdom holds that sin stocks gain popularity in a recession, an evaluation of how the five indexes would have performed in recent years produced surprising results, Phillips said.

Last year, when the S&P 500 index was down 37 percent, the worst-performing FaithShares fund, the Catholic Values Index, lost 33.3 percent. In the first six months of 2009, the funds posted gains ranging from 7.9 percent to 10.8 percent. In contrast, the S&P 500 grew just 3.

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