Can a Christian Own a Mutual Fund?

Until recently, most publicly traded companies have at least attempted to largely stay away from potentially controversial social and political issues, and the primary reason was simple: they didn't want to risk alienating part of their target market. While there have long been companies who profited from immoral behavior, they were fairly easy for Christian investors to avoid.

But this has changed abruptly in recent years. Many of the mega-companies in existence today, particularly in the U.S., have completely changed their position and taken clear sides on issues they see as being social and political (though Christians should predominantly see many of these as being of a moral nature). There are a variety of potential explanations for this, but much of it seems to stem from a concept known as corporate social responsibility, the idea that businesses should become directly involved in helping to fix what is wrong in the world.

That might sound good, but the problem is that what people view as wrong depends dramatically on their worldview. As the proportion of the U.S. who self-identify as 'Christian' and go to church are both declining rapidly, while those reporting no religious affiliation are on the rise, the predominant worldview among Americans is increasingly represented by humanism, the belief that humans should themselves define what is right and wrong in the world apart from any divine being or authority. Further, humanism argues that people should be liberated from the perceived constraints imposed by any form of religion, though it can be argued that humanism is itself at least a quasi-religion.

But Christians know that God is the only Source of truth, that He alone can truly define what is right and wrong, and that the limits He has set for human behavior must be followed for human flourishing to take place. Rebelling against His authority will ultimately result in ruin.

"Jesus said to him, “I am the way, and the truth, and the life; no one comes to the Father but through Me."

John 14:6

"Therefore Pilate said to Him, “So You are a king?” Jesus answered, “You say correctly that I am a king. For this purpose I have been born, and for this I have come into the world: to testify to the truth. Everyone who is of the truth listens to My voice."

John 18:37

"There is a way which seems right to a person, but its end is the way of death."

Prov. 14:12

Vancouver Island, British Columbia

In response to the changing moral scene, many companies have begun directly supporting an array of issues contrary to Biblical teaching (e.g., supporting pro-abortion legislation, advocating for an unbiblical view of sexuality). It's not entirely clear whether this is due to the worldview of their top executives, a perceived opportunity to differentiate themselves from their competitors, or both. But what is clear is that Americans are becoming more open to companies engaging in these actions. Companies with conservative values are generally viewed less favorably from both consumers' and employees' perspectives. Environmental/social/governance (ESG) funds, which have seen massive inflows of capital from investors, have largely become a political tool used to further the agenda of liberal interest groups, while faith-driven ESG funds have been effectively pushed out of the arena of public discourse.

And, of course, there are many companies whose business model is entirely predicated on satisfying their customers' sinful desires, and these companies are generally met with significantly less derision in the public arena than they did only a short while ago.

This creates a problem for Christian investors. As part of their stewardship, Christians should grow what God has entrusted to them (e.g., Matt. 25:14-30).

"But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever."

1 Tim. 5:8

Investing can be an important means by which Christians provide for their household. But they must do so in ways that honor Him.

"In all your ways acknowledge Him, and He will make your paths straight."

Prov. 3:6

"Therefore, whether you eat or drink, or whatever you do, do all things for the glory of God."

1 Cor. 10:31

Most professing Christians agree that they should not buy individual stock in a company whose business is based on manufacturing abortion drugs or creating pornographic material. But the popularity of mutual and exchange-traded funds, which typically have holdings in hundreds or thousands of different companies, complicates matters significantly. Should Christians own such a fund if it holds any stock that is offensive to their biblically-driven values?

There are differing views on this. Some believe that owning stock in a company, even indirectly through a fund, that willfully engages in immoral activity should be avoided at all costs. They typically distinguish between buying an item from an offensive company and owning stock in that company, asserting the former to be acceptable and the latter to be unacceptable. Others believe that owning individual stock in such a company should certainly be avoided but that owning a fund that included the company in its holdings may be acceptable. They liken owning a fund with an offensive company in its holdings as being little, if any, different from buying an unoffensive item from an offensive company.

Personally, I lean toward the latter position. Owning a stock via some type of fund does mean that I have part ownership of that company, but in practice, I have literally no say whatsoever in how that company is run. And while I don't patronize companies whose entire business model is built on satisfying sinful desires, several of the companies I patronize engage in behaviors that I find morally detestable. For instance, three of the four largest grocery store chains in the U.S. actively promote unbiblical relationships.

Is choosing to shop at a specific retailer that engages in reprehensible activities all that different from indirectly owning an infinitesimal portion of the retailer? While I'm not sure, I don't think so.

Part of my reasoning goes back to the apostle Paul's teaching to the Corinthians. He made it clear that Christians shouldn't attempt to avoid any association with those who regularly engage in sinful behavior because this is an inevitability caused by our living in a fallen world.

"I wrote to you in my letter not to associate with sexually immoral people; I did not at all mean with the sexually immoral people of this world, or with the greedy and swindlers, or with idolaters, for then you would have to leave the world."

1 Cor. 5:9-10

That doesn't mean that Christian investors have no choice but to go along with whatever Wall Street's agenda is though. Several investment firms focusing on biblically responsible investing (BRI) have arisen in recent years, and the one that appeals to me most is Inspire Investing (I have no relationship with this company, though I may invest in their exchange-traded funds in the future.) While I don't entirely share their perspectives about BRI, their exchange-traded funds and their free investment screening tool known as Inspire Insight, both of which are based on biblical criteria, are admirable. And I also like that their screening criteria include not only negative aspects of companies but also positive ones, such as customer privacy, data security, employee health and safety, and air quality, among many others. All else being equal, I'd rather invest in a company doing good for the world rather than one that was just 'neutral'.

From an investment perspective, I have some issues with some of Inspire's funds, which I'll likely discuss in a future post, but they are certainly an excellent choice for Christian investors. The more that Christians vocalize their desire for such products and put their money where their heart should be, the more that the market will offer. Perhaps this can lead to at least some real change. For instance, Costco changed their position on supporting unbiblical relationships to being 'neutral' after they were contacted by Inspire's Investment Committee.

Ultimately, this specific issue is one where I believe that Christians should seek The Holy Spirit's guidance to help them know what to do for themselves. And Christians should extend grace to other believers who are led to different conclusion about how to invest.