Investing To Change the World with Dr. Finny Kuruvilla

This faith and finance podcast is underwritten in part by Eventide Investments. They believe that investing is more than just returns. It's an opportunity to partner with companies that align with your values and are making a positive difference in the world.

Learn more at eventideinvestments.com. In Christ Jesus for good works, which God prepared beforehand that we should walk in them. Ephesians 2 10.

I am Rob West. Our good works are not for our sake, but for God's sake, to give him glory. Investing gives us a powerful way to do that. Today we'll talk with Fini Kuravilla about investing to change the world. And then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance. Biblical wisdom for your financial decisions. Great to have you back on the program. It's great to be with you, Rob.

I'm actually in Boston this week, participating in a two-day intensive at Eventide. It's a course called God's Designed for Investing and here with some other Christian financial industry leaders. And so I thought this would be a great opportunity to sit down with you, Fini, and talk for a bit about a topic that I know is on your heart. It's a real passion of yours. And Fini, that passion, I believe, for faith-based investing goes back to what you said.

Yeah, it actually started when I was in medical school right after graduating from college. I came out here to Boston, and being an MD-PhD student, I had a small stipend, which I could support myself with. And at the encouragement of my mom, I decided to look into investing opportunities to one day be able to put down a deposit on a home. And I looked at the available options in the mutual fund world and really struggled because when you look at investment opportunities, you can see the top 10 investments right on the fact sheet. And you could see a number of companies there that were difficult to stomach as a Christian investor in tobacco, gambling, pornography, etc. And so began to search for another way to bring integrity and really have investing be an extension of my values, not at odds with my values.

And that led to the founding of Eventide Asset Management, along with some friends of yours. Let's back up, though, because we're going to dig into what you said about this idea of integrity in your investing. But I want to talk about why investing began in the first place. Why does investing exist? Yeah, you know, Rob, it's so important with any topic to start with a why.

And so often we lose our way when we've lost our why. And the fundamental purpose of investing is to supply capital to businesses. And the enterprise of modern investing began in the 1400s and 1500s with the development of corporations, particularly that were involved in financing traffic of ships across large bodies of waters, especially the Atlantic. And this was where we started to see, for example, the liquidity from corporations, stockholders, exchanges, etc. But the fundamental purpose from the very beginning has been to deliver capital to these businesses in order that they can hopefully do a good work. Of course, that purpose can also be twisted to supply capital to businesses that are working at cross purposes with God's design for humanity. But full stop, we always need to remember that the purpose of investing is to deliver capital to businesses. Yeah. And what has perhaps gotten lost along the way is something adjacent to that. And that is that investing is ownership, right?

Exactly. So when you supply that capital to a business, in exchange for that capital, you're receiving part ownership in that company. And so investing is ownership, which means that you then have some kind of ethical responsibility that's conferred upon you. Because of that ownership that you have, this would be the same as if you owned a small business or a private business, there's a degree of responsibility that you have for the actions of that company. And so yeah, the natural corollary is the purpose of investing is to supply capital to businesses, which means that you're an owner, which means that that then confers ethical responsibility for those companies.

That's well said. Well, today, when we come back from our first break, we'll have the opportunity to talk about investing is ownership and what it looks like to have wholeness or integrity with every facet of our lives, including this area of finance and investing. And what that can look like in your life and portfolio and some practical examples of how that comes to pass in a way that promotes human flourishing and even a kingdom impact. Dr. Finney Kuravilla with us today, Co-CIO at Eventide Asset Management.

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That's chministries.org. It's great to have you with us today on faith and finance. I'm Rob West. Joining me today, my friend, Dr. Finney Kuravilla. He's Co-Chief Investment Officer and Senior Portfolio Manager at Eventide Asset Management, an underwriter of this program. We're talking about investing to change the world. And before the break, Finney gave us a bit of an education around the purpose of investing. And then alongside that, the idea that investing is ownership. And Finney, I want to pick up on that idea and talk about as Christ followers, we of course want wholeness or integrity in every facet of our lives.

And I'd love for you to share from your heart about what that looks like as we extend that idea into investing. One of my favorite passages on this topic comes from Romans 12, where it says, let love be without hypocrisy, avoid what is evil, cling to what is good. None of us wants to be hypocrites, of course. And what is meant by that, I think, in the context of investing is that we don't want to be saying one thing about what we believe and how we want the world to look like, but then to be profiting in our portfolios from actions that completely contradict that. And so really to achieve integrity, I think there's two or three steps. The first is, as Romans 12 says, is to avoid what is evil. We don't want to be profiting from, for example, pornography or abortion or tobacco or some of those activities that are clearly antithetical to scripture.

Secondly, we want to cling to what is good. Business is fundamentally about advancing the common good, and we should be excited about investing in businesses that are promoting the good. Being a physician, I get excited about the many, many advances that I have seen businesses make in the field of health care and biotech.

But there's so many examples in all different kinds of fields. The third example of what it looks like to have integrity is being investors. In a sense, we're holding the steering wheel of the company because investors collectively are the ones that control these companies, that control the directors who in turn control the CEO. And we can use our position as investors in order to influence the actions of the company to be even better, to be even more in line with these broader purposes that God has laid out for us.

Yeah, that's powerful. Finney, is there a particular company or story that comes to mind as you think about this type of investing to change the world? Being in health care, I will gravitate to some of those examples. When I was a physician, I used to treat children who had leukemia, and I often was just heartbroken to see little children lose their lives due to the devastation of leukemia. And thanks to a lot of the innovation that we have seen with our companies today, the probability of if you have a child with leukemia of he or she making it to adulthood is greater than 90 percent.

It used to be 10 percent back in the 1970s, but thankfully, because of all the good work that these companies have done, it's north of 90 percent. And I just think that is amazing. And when you are sitting there with parents and with the child at bedside and you begin to see how effectual and how remarkable these companies have done in terms of delivering these exciting new therapeutics that have very mild side effects, even because they're so targeted. It gets me really excited. And I can tell you, Rob, we are just scratching the surface of what's going to be likely a century of significant innovations across many different domains of health care.

Wow. Yeah, that just really underscores this idea of the importance of investment capital to drive some of those outcomes you're describing. Phinney, I want to talk about performance for a moment or perhaps outperformance. Of course, as investors, we're seeking a return and there's a term that you're well familiar with.

Our listeners may not be. It's called alpha. And it has to do with that measure of an investment's ability to outperform the market. Is this idea of promoting the common good a source of outperformance?

Yeah, it really is. And I will point to a couple of books that demonstrate this for those who are interested to go deeper. Fred Reichheld has a book called Winning on Purpose. And then Alex Edmonds has a book called Grow the Pie. He's a professor at the Wharton Business School at the University of Pennsylvania. And Fred Reichheld is a consultant with Bain. And they have compiled a variety of studies showing that it's not so much the avoid component, the screening out companies that are not in line with some of these principles that we talked about. The most effective way to get alpha over the long term, and of course, these are always long term oriented studies, is to identify companies that are truly adding value to their stakeholders, particularly customers and employees. There's other stakeholders as well that are important. But time and time again, we have seen through these studies that that actually over time, those types of companies are actually outperforming their peers. And so we think that's very exciting to see that God's way where we love our neighbor as ourselves over long periods of time is actually going to tend to produce long term outperformance.

That's so exciting. Phinney, talk about what that looks like for you and your team on a daily basis as you and your co-CIO lead the investment team. How do you bring that idea of looking for companies that promote the common good alongside the other elements of alpha? How do you bring that into the equation as you research and analyze companies?

Yeah, it's a lot of work. But what we have is we've built out a framework that we call Business 360 that looks at how a business is engaging with. We look at six stakeholders, customers, employees, the supply chain, the community in which the business is located, the environment and then broader society. And by measuring and interrogating how a company is doing with respect to either value creation or value extraction with respect to those stakeholders, we can get a good sense, we think, of how that company is with respect to this broader purpose of investing, whether or not it's aligned with this notion of creating value and promoting the global common good.

So what we do is we run through, we have a team of three people who are full time doing this that are scouring the universe of publicly traded companies to find those that are excelling at value creation. And our thesis, which is really a thesis that we think is scriptural more than anything original to us, is that those are the ones, because they're operating in the grain of God's design for the universe, are going to ultimately outperform over the long haul. Vinnie, this is an entirely different landscape, faith-based investing, today than it was even three years ago. What are you most excited about as you look out across this space and what's happening? I'm excited about several dimensions, Rob, about what we're seeing right now. One is that I think there's just growing awareness that is coming from both the faith-based side as well as the secular side and realizing that you really can't be neutral with respect to investing.

Investing is by its very nature tinged with the morality or the ethics of the companies in which we're investing. And I think that awareness is something that I'm very excited about. I'm just glad to see the consciousness rising there. And I think we're still in the early days of that.

I think we're seeing this be applied in lots of creative ways across not just equities, but debt instruments and other types of investment vehicles, where if we can continue down this track, and particularly if the faith-based community participates as it should, I think this is a very exciting opportunity in history to be able to use our dollars to not only get a return for ourselves, which obviously that's nice and important, but to use our dollars in ways that are constructive with our values to promote this kind of kingdom longing, if you will, for the new heavens and the new earth as we await the return of our king. Wow. Well, it's an incredible vision and opportunity, and I'm so delighted we were able to share that with our listeners today. Unfortunately, we're out of time, but we're going to have to have you back real soon. Finney, thanks for stopping by. Hey, thanks a lot, Rob. Really appreciate it.

That's Finney Kuravilla. He's co-CIO with the team here at Eventide Asset Management, talking about investing that has the power to change the world. Folks, if you want to learn more, go to eventidefunds.com. That's eventidefunds.com. Back with your questions after this.

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It's great to have you with us today on Faith and Finance. The number 800-525-7000. That's 800-525-7000. You can call right now.

Let's head to Arkansas. Hi, Pat. How can I help you? Hey, thank you, first of all, for what you do with your show.

It's been very helpful to me and I always learn something when I listen to it. Well, thank you, Pat. I am 65. My wife is 73 and we're both drawing Social Security.

I have two part time jobs, one in a church and one with the sheriff's office. And we have about 300,000 in 401Ks. And my question is, I heard somewhere that you can take four percent a year out of your 401Ks and they should last you.

But I'm looking for some information like that. When do we actually start taking money out of these 401Ks? Yeah, well, it's a great question. And what you're referencing is what we call the four percent rule, which is research that was published by a gentleman named Bill Bengen back in the early 90s. And basically he looked at hundreds and hundreds of retirement portfolios and tried to determine what was the rate of withdrawal that could be sustainable in any economic scenario where through prudent investment strategy, properly diversified, risk adjusted for the fact that you're in a retirement season of life focused on capital preservation and not capital accumulation. What was that percentage rate of withdrawal that would allow you to maintain over time, not in any one quarter or a year, but over, let's say, a decade, maintain that balance and live off the money. And he came up with the number of four percent.

And that's been the number that retirement planners and financial planners have used for a long time. There's been some additional research that's been done, especially factoring in just the returns we've seen over the last 20 years or more that suggests that perhaps you could go as much as five percent. But I think four percent is just kind of a good rule of thumb.

Is there any guarantee? Absolutely not. But it's based on some pretty sound research. So the idea would be that with your three hundred thousand dollar portfolio invested properly, and I'd recommend having an advisor be the one to select those investments where you have probably somewhere. I mean, at age 70, with people living longer, you may want to keep as much as 40 percent in stocks with 50 or 60 percent in fixed income in maybe take five percent off each of those and allocate to the precious metals, something like that. But you should be able to pull a thousand a month or twelve thousand a year on your three hundred grand. So that's kind of the background on that. And I think, you know, the timing on that is obviously up to you if you need the money. That's why it's there.

Go ahead and draw it. If because you're continuing with two part time jobs and you're living modestly, you're able to cover your bills and leave it alone. Obviously, that's ideal because the longer you can wait to withdraw anything, even at four percent a year, the more time it has to grow on a tax deferred basis. And that's just going to allow it to last even longer and preserve it if you need more than four percent down the year because you needed long term care and you don't have a policy. And it's, you know, full nursing care is running nine, ten thousand a month.

And that's obviously growing at a pretty good clip with health care inflation. But give me your thoughts on all that, Pat. No, I really wanted to know where that number came from. And you told me and I appreciate that. OK, very good.

Yeah. So I think that's something you can think through as you consider your own withdrawal rate and timing. And again, if you're looking for an adviser to help you make those investment decisions, you could head to our website, faith, fi dot com and click, find a professional and find a certified kingdom adviser there in Arkansas. If you don't already have an adviser, if you do, of course, feel free to stay right where you are. Thanks for your call, sir. And your kind remarks about the program. I appreciate it. Let's head to Illinois. Hi, Rita.

How can I help? Yes. Thank you for taking my call. Sure.

I have a couple of questions. First off, I was unable to file my income taxes on time this year and I did again and was able to get an extension. Are there any penalties that I need to be aware of?

Yeah, there may be is the bottom line. You know, typically you will not be assessed a penalty if you've already either a paid at least 90 percent of the taxes that were due for the year. Because remember, although it's a filing extension, it's not an extension on the payment that was due.

And so as long as you paid substantially all of what you owed for the tax year 2023 prior to the filing deadline and before the extension, then and that substantial amount is 90 percent or more, then you probably won't have a penalty. Or if you paid at least what you had to pay the prior year, you know, those would be kind of two general rules of thumb. So what the key would be is for you to just go ahead and get that filed as soon as you can. And again, if you owe anything more than you've already paid in, the key is to try to get that paid as quickly as you can, because that's just going to lessen any interest or penalties.

But it's not something I would be terribly concerned about. I would just make it a priority and get it done. Yes, sir.

Thank you. And I have another question. I have become very lazy regarding budgeting, keeping my finances, keeping on track with them. How do I start over?

Where do I begin? Well, a couple of thoughts on that. Number one is, listen, let's just I think your approach is the right one in that you're saying, listen, I maybe wish I would have done some things differently. Perhaps I could have been a little bit more on top of this in the past. But I think the key is to say from this point forward, I want to be that faithful steward that God has called me to be. And it's time to get on top of this.

Well, we all deal with those in various areas of our lives. So don't worry about the mistakes you've made in the past. Let's get you on track moving forward. The key is to start with that budget, that spending plan that's realistic. And we're all needing to update our budgets because expenses are up across the board.

But let's do this. We have some certified Christian financial counselors that are a part of our team. And I'd like to give you a gift of one of those CERT CFCs to connect with you at no cost and help get you back on track. So you stay on the line.

We'll get your information and get somebody in touch with you. Well, as we round out the broadcast today, let me finish by reminding you the five principles of money management that we find in God's word. You know, after we recognize that God owns it all and that we're stewards or managers of God's resources, the next question is, well, how do I faithfully manage those resources? And that's where these five wise principles come in. Number one, spend less than you earn. That's the key to every financial success. Number two, avoid the use of debt because debt mortgages the future.

Number three, have some liquidity or some margin in your financial life, something left over at the end of the month. That's the only way that you'll ultimately be able to accomplish your longer term goals and objectives, whether that's paying down your debt or increasing your giving or saving for the future. Fourth, have long term goals. You see, the longer term your perspective, the better the decision you'll make today. And number five is give generously because giving breaks the grip of money over our lives.

I hope those five principles are an encouragement to you and will be helpful to you along the way. Well, a big thanks to my team today. We certainly couldn't do this without them. We're grateful for Jim Henry, Taylor Standridge, Chad Clark and Amy Rios and everybody here at Faith Buy. We hope you'll come back and join us next time. And until then, may God bless you. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.