NEW YORK — With pornography bringing big money to large, mainstream corporations, investors often find themselves in a bind. How to make money without being mired in guilt over supporting pornography—or, in other cases, abortion?
Former Domino's Pizza owner and Catholic philanthropist Tom Monaghan thinks he has the answer.
In May, Monaghan, who has been spending his estimated $1 billion fortune on various Catholic causes, unveiled what amounts to a clean mutual fund for Catholic investors.
The Ave Maria Catholic Values Fund screens out companies involved in abortion or the distribution of pornography while at the same time seeking a maximum return for investors.
“Fortunately, it's not too difficult,” said portfolio manager Gregg Watkins. He said fewer than 10% of available stocks are off-limits to the pro-family investor. Many of those 200 companies, however, are large and include subsidiaries that the untrained investor might miss. Watkins cited General Motors and Johnson & Johnson as examples—the first, because of its involvement in the X-rated film trade; the latter because of its role in developing abortifacient drugs.
Approached several months ago by a small number of longtime clients with the idea of beginning a screened fund, the Ave Maria Fund was launched May 1 with an initial investment of somewhere between $15 million and $20 million, Watkins said. The fund's objective, Watkins added, is the same as most others — long-term capital appreciation through ownership of a diversified portfolio of shares of common stock.
One of the initial investors in the Ave Maria Fund, Richard Walsh, said he likes not having to worry about what his money supports, adding that the fund appealed to him “as a practicing Catholic.”
“I guess from my point of view I get a solid investment and an investment that I can be assured is not involved with things that I don't approve of,” said Walsh, 65, a former manufacturing company owner in Bloomfield Hills, Mich.
While Watkins allowed that funds like his might very well prompt corporate executives to realize they don't have “a free pass” from investors, his primary purpose is not advocacy.
“To the extent that companies change their behavior, that's good; but we are not going to take our investors' money and pick fights with it,” Watkins said. “We are going to do our darndest to earn a good return on their money and do it in a way that they don't have to worry about the types of business they are invested in.”
Schwartz Investment Counsel Inc., of Bloomfield Hills, Mich., is managing the Ave Maria Fund. Watkins affirmed that Schwarz also manages funds that invest in companies excluded from the Ave Maria Fund. He downplayed the significance of this, however, arguing that other clients are “entitled to have their money managed according to their principles just as much as anyone else would be.”
Are Catholics obligated to use screened funds like Ave Maria? Not according to Phil Lenahan, a money management counselor associated with the San Diego-based apologetics organization Catholic Answers (and a Register columnist).
“For me it's pretty basic that we should certainly do all that we can to promote the culture of life,” Lenahan said. “But let's say you have a mutual fund which invests in 100 companies and one has a subsidiary which gave a $5,000 gift to Planned Parenthood. That's quite limited. There would be some concern I could have if people felt they were absolutely obligated to invest solely with a fund like [the Ave Maria fund].”
Lenahan said Catholics should not feel that there is a “flat-out obligation” to invest in screened funds because, as he put it, “there are alternatives that probably are OK.”
Moral theologian Msgr. William B. Smith, a professor of moral theology at St. Joseph's Seminary in Dunwoodie, N.Y., took a similar view.
Msgr. Smith distinguished between investments that involve “cooperation,” or, in legal terms, complicity, on the part of the investor and those that do not.
Buying stock is a direct investment because it means purchasing part of the company. But investing in mutual funds, Msgr. Smith said, is “enormously complicated,” as a moral question, since investors do not actually buy shares in the companies that form the fund. Rather, they are investing into the fund itself.
“Some part of our tax money ends up in the hands of Planned Parenthood,” Msgr. Smith said. “I don't approve of that. But out of a couple hundred billion dollar federal budget, there is no real sense in which I or any other person is a cooperator in that.”
Msgr. Smith advised that consumers be careful about any company that claims take the sin out of the marketplace.
“It [the company] might sound noble, but it's very, very difficult to pin this down in terms of moral accountability,” Msgr. Smith said. “Just because someone runs a flag up that says Catholic does not convince me they are.”
For Ave Maria, determining which investments are good and which are bad is the job of a six-person advisory board, composed of Monaghan himself, former Major League Baseball Commissioner Bowie Kuhn, economist Michael Novak, activist Phyllis Schlafly, Ave Maria Foundation executive director Paul Roney and retired business executive Thomas Sullivan.
Watkins characterized the screened fund as not extremely aggressive. “Our objective is to beat the overall market over a reasonable time,” he said. “Like most stock funds, it's a far more appropriate investment for long-term objectives because the nature of the stock market is such that in the short term it's extremely unpredictable.”