What Are Catholic Values Investment Strategies?

People often align their investments with their values and beliefs, which is where investing styles like ESG investing or biblically responsible investing shine. One particularly popular investment strategy is Catholic values investing, which may benefit your portfolio in several ways.

Regardless of your religious affiliation, a financial advisor can help you create a plan.

What Is Catholic Investing?

Catholic values investing is an approach to investing that seeks to align investments with the values of the Roman Catholic Church. 

It’s used by Catholic institutions and individuals who want their values reflected in the investments they hold. With this approach, investors can ensure their portfolio reflects the teachings of the Roman Catholic Church as expressed in its Magisterium, encyclicals and various Vatican edicts and documents.

While Catholic values investing began in the 1960s, this general approach to investing in a religiously compliant way dates back further. Quakers and Methodists started investing this way in the 1800s when they stood up against the slave trade and backed their beliefs with their money.

In 2003, the church established the Socially Responsible Investment Guidelines for the United States Conference of Catholic Bishops. These principles clearly define how Catholic investors should approach investing.

Examples of Catholic Investing

Catholic investing prohibits investing in companies that engage in activities it morally opposes. 

For example, if a medical company decides to start undertaking stem cell research, Catholic values investors will divest from it. Similarly, if that company is part of an exchange-traded fund (ETF), Catholic investors will pull their money from that fund. The same would apply to corporations that derive more than a certain percentage of their revenue from the production or sale of contraceptives.

In the event that one of these companies already receives considerable funding from Catholic investors, investors may direct the company to avoid decisions that will alienate their investors, as Catholic investors – and their portfolio managers – are not passive owners.

While Catholic investing does emphasize an exclusionary approach to investing, it also promotes supporting companies doing good. For example, a company that empowers and provides aid to communities in need could attract more Catholic investors.

Screening for Catholic Investing

Part of Catholic investing is the screening process, which is used to determine whether companies match the morals of the Church. Through this screening, Catholic investors ascertain which companies  engage in business that the Church deems detrimental to human life and dignity.

Catholic investors also use inclusionary screening for companies that it deems to have a positive impact on society. In particular, the USCCB outlines five main categories Catholic investors should use in their screening.

1. Protecting Human Life
2. Promoting Human Dignity
3. Enhancing the Common Good
4. Pursuing Economic Justice
5. Saving Our Global Common Home

There are both negative and positive screening factors that Catholic investors use in their assessment.

Negative Screening Factors

• Racial and gender discrimination
• Human rights violations
• Tobacco and other harmful drugs
• Pornography and other forms of adult entertainment
• Manufacturing of weapons, from nuclear bombs to firearms
• Predatory lending

Positive Screening Factors

• Growing access to affordable housing
• Environment and climate improvements
• High-quality corporate and social governance and responsibility
• Have an impact on depressed communities
• High labor standards, including safe workplaces and good wages

Who Are Catholic Investors?

While you may think of Catholic investors as individuals (and they often are), major groups are institutional investors. As a large group of investors banded together, they tend to hold more sway over the companies and organizations they invest in. 

Looking beyond individual investors and families, there are two main types of institutional Catholic investors:

• Educational systems, including Catholic and Jesuit K-12 school systems, as well as universities, colleges and seminaries.
• Catholic healthcare and services, including Catholic hospitals, clinics, outreach centers and social work organizations.

How to Start Investing with Catholic Values

Just as there are different approaches to Catholicism, there are different approaches to Catholic investing. Know that this process can take time, but with dedication, research and education, you can make sound investments that align with your values.

Once you’ve decided to begin investing in line with your values, you must first make a financial plan outlining your investment strategy. You can begin with a statement of intent that specifically lists the areas you want to avoid, as well as any specific areas you want to target.

A financial advisor can help you identify potential investments that align with both your investment preferences and long-term financial goals. 

Investment Options for Catholic Values Portfolios

Many investors who want to follow Catholic guidelines look for investment vehicles that already incorporate values-based screens. 

Several asset managers offer mutual funds and ETFs built specifically for Catholic investors. These funds apply the USCCB investment guidelines directly within the portfolio, removing companies that conflict with Church teachings and including those that align with its social and moral priorities. This can make it easier for individuals or institutions to invest without having to perform a manual review of each company or security individually.

Some investors prefer separately managed accounts (SMAs) if they want more control. An SMA allows an investor to set customized screens with an advisor or asset manager. This structure can support either stricter or more flexible interpretations of Catholic values, depending on the preferences of the investor or institution.

Faith-based index funds have also grown in recent years. These funds track indexes that apply Catholic screens, offering a more rules-based approach at a typically lower cost. They operate similarly to mainstream index funds but exclude companies that do not meet the selected moral criteria.

Investors can also use bonds or fixed-income vehicles that follow Catholic guidelines. Some bond strategies emphasize issuers that support community development, fair labor practices or environmental stewardship. These can complement equity-based Catholic portfolios and add risk diversification.

Finally, shareholder engagement is another tool. Some Catholic organizations file shareholder resolutions or vote proxies to encourage corporate behavior that aligns with their values. While individual investors may not have the same influence as large Catholic institutions, many funds that follow USCCB guidelines promote engagement as a part of their strategy, allowing smaller investors to participate in values-based stewardship.

Bottom Line

Catholic investing is a type of values-based investing, like ESG or impact investing. It involves making investments that align with the Church’s mission of preserving and promoting human life and dignity. Participants include large institutions, as well as families and individual investors. 

If you’re curious about Catholic values investing and want to know more, consider reaching out to your local parish or contacting a financial advisor.

Investing Tips

• If you’re interested in Catholic investing, talk to a financial advisor about making your investments values-based. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• With inflation having risen quickly recently, you need to weigh its impact on your portfolio. SmartAsset’s inflation calculator gives you an estimate of how much your assets could be worth in the future considering the rate of inflation.

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