3 Benefits of Faith-Based Investing 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 Hi, I'm Rob West.

Faith-based investing offers more than just financial gains. Today, Phinney Currivila joins us to explore the deeper impact of aligning our investments with our values. 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 journey. Well, our guest today is Dr. Phinney Currivila. He's co-chief investment officer and senior portfolio manager at Eventide Asset Management and underwriter of this program. Phinney holds an MD from Harvard Medical School and a PhD in chemical biology from Harvard University. And yet his passion is faith-based investing. Phinney, great to have you back with us.

It's great to be with you, Rob. Phinney, at our recent Kingdom Advisors Conference, you highlighted three benefits of faith-based investing. They were integrity, impact and performance. And we're going to break those down today. But first, you know, these principles, I think, also address common objections to faith-based investing. So if you don't mind, let's start there. What are some of those more common objections you hear about faith-based investing?

Yeah, thanks, Rob. There's three main objections that we hear. And certainly Christians can have different views on these.

But let me give you our take on these objections. The first objection that we hear is, I'm not responsible for the actions of the companies that I own. And the way that we normally respond to that is by saying that investing is ownership. When someone is investing in a publicly traded company or a private company, you own shares in that company, which means you're a part owner. And that means that you are in some way connected to its actions. So if you own a small business and that business were, say, a foul of the laws, that would reflect on you. And in the same way, we would say that if you own partial stakes in a publicly traded company, that you're connected to those those actions as well.

The second objection that we hear is, what difference does it make? These are big companies. Well, in reality, one of the things that we have observed over the years is it's a lot like voting, where we know that in a vote, say, presidential election, we just went through one not that long ago, that less than 1% of the total number of voters are actually the determiners of the election. And in the same way, it's actually very small percentages that swing the ethos of these companies in either direction. And so this is something that we feel very strongly about and have data that even a small percentage of people can make a big difference. The third objection that we often hear is concerns about underperformance. And we would make the case that ethical investing, investing in line with good, solid values doesn't necessarily mean low returns. And in fact, we would make the case that companies that operate with integrity, that are run by qualified management teams that are doing responsible business practices day in and day out that they should be outperforming their peers, and even give reduced risk over the long haul.

Yeah, that's well said, I want to dig into a couple of these. We just have about 90 seconds before our first break, investing is ownership. And that's true, Finney, even if we're buying these shares on the secondary market, isn't that right? Absolutely, yeah, you are an owner, even on the secondary market, which means that you can vote in, for example, shareholder resolutions, and you have a stake that's very meaningful, no matter how big or small that it is. And isn't it also true that, you know, there's all kinds of ways that we can engage culture and bring Christ with us and Christian values? I think it's fascinating just how important corporate America is, and the boardrooms of the biggest companies in this country in terms of influencing our culture, which also means that we can make a big difference by way of our shareholder engagement.

Isn't that right? Absolutely. I mean, you touched on something really important there, which is that companies really shape culture in powerful ways.

Think about social media, think about big tech, think about how much our behaviors are influenced by advertisements, etc. And so this means this is an opportunity for Christians in particular to step up and to have their voice be exerted in the marketplace as these companies respond to their respective shareholders. What an opportunity. We're talking faith-based investing today with Dr. Finney Kuravilla. He's co-chief investment officer and senior portfolio manager at Eventide Asset Management, an underwriter of this program. When we come back, three benefits of faith-based investing, integrity, impact, and performance. Don't go anywhere.

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I'm Rob West. With me today, my friend, Dr. Finney Curavilla. He's Co-Chief Investment Officer and Senior Portfolio Manager at Eventide Asset Management, an underwriter of this program and a real leader in faith-based investing. And Finney was a teacher, was a part of the faculty, if you will, of our recent Kingdom Advisors Conference, and he had the opportunity to teach on really some of the key benefits of faith-based investing, integrity, impact, and performance.

And I'm looking forward to unpacking some of these. Finney, you started by talking about some of the common objections. One of those you said is, well, I'll underperform if I choose faith-based investments, essentially limiting my universe of investments to those that align with my values. And yet, you said there is compelling data out there, even empirical data, that would say not only do you not underperform, it can be a source of outperformance, right?

That's exactly right. And to illustrate this, there is a lot of data out there, both from the academic world and the business world, that, for example, if you are serving your customers well, then those customers will come back and they'll recommend that particular product or service to their friends and family, which will increase your own repeat business, as opposed to taking advantage of your customers or clients, which we've had experiences like that, you don't want to go back. That's a simple example, but it's a powerful one. Similarly, companies that are adding value to their employees, where people just love to be at work there, they love to be advocating for the company, they bring their best self to work, those are the kinds of companies that outperform over the long haul. So it shouldn't be a surprise that companies that are adding value, as opposed to extracting value, are the ones that do the best over the long haul. Yeah, I love that. You're exactly right. It should be true.

And I love that the data says it absolutely is. All right, let's dive into these benefits a little deeper. The first one, of course, is this idea of integrity. Share with us how faith-based investing upholds integrity and why that should matter for our listeners as Christian investors. Yeah, the banner that we would put over investing is the love-your-neighbor principle.

Hopefully that's something that we can all get behind, where we want to be treating people as we want to be treated. That's the positive statement. The negative statement would be, for example, from Proverbs chapter one, where the father is speaking to the son, and the father tells the son not to pursue what he calls ill-gotten gain, which means gains that comes from exploiting others or taking advantage of individuals. So, for example, tobacco or gambling.

There's a lot of those stocks that are in, say, some of the largest ETFs and funds that are out there. And we would make the case that that's taking advantage of human weakness, and that's something where we don't want to be participating in those kinds of hollow returns. Investing with integrity means loving our neighbor and trying to seek their welfare. That's something that should be compelling to those of us who are especially faith-based investors. Yeah, I love what your coworker Jason Meyer says when he talks about really the purpose of investing is to supply capital, and really the intent of business is goods and services, right? So it should be good for our neighbors, and it should serve others, correct? That's absolutely right, yeah.

It's not bads and taking advantage. It's goods and services. And sometimes we forget that business at its core is supposed to be adding value to society. And we live in an era now where people are more suspicious of business because sometimes we've forgotten the purpose of business. And one of the things that we as investors, we as financial advisors can be doing is getting that positive dimension of business back into view, which should help us to build trust again with the wider public.

Yeah, I like that a lot. Now let's talk about the real impact that's possible, Finney. Some people might argue that investing in alignment with Christian values doesn't really make a difference. Explain how that's not true. Yeah, one of the examples that I love to talk about is the example of apartheid in the 1970s. So apartheid was a system of separation where the blacks and the whites were segregated, different restrooms, different water fountains, etc. And there were a lot of attempts from governments. There was an embargo. There was a lot that tried to bear into that problem.

But in fact, what proved decisive was a relatively small group of Christian investors in the United States who worked with Reverend Leon Sullivan. And they petitioned Ford and General Motors to abolish the system of apartheid within the companies themselves. So to have, for example, integrated restrooms, etc.

within their own facilities. And those shareholder resolutions were adopted. And then after Ford adopted it, Goodyear followed and the dominoes began to fall. This is a good example of what investors can do, albeit small, with just the strategic use of their influence of shareholder resolutions in order to influence companies toward the good. And so we think there's a lot of examples that are available like that today, where we in the faith-based Christian community can use our influence to promote the common good and human flourishing. Vinnie, in your presentation, you talked about total return in God's economy. And I think this is a big idea. And a lot of investors miss this. So talk about the connection between integrity and impact and how they contribute to financial success.

Yeah, this is a big topic. And normally when people will talk about total return, they just mean share price return plus dividend return. But we would make the case that that's a too small of a picture of what return looks like. In fact, you should think about total return as extending beyond financial gains into integrity and impact. So I like to think of total return as being an equation where it's total return equals financial return plus integrity plus impact.

And how do you put a price on integrity? It's something that we would say is priceless. Impact, how are the investments that we're making changing the world and shaping the world in ways that are either in line with our values or hostile to our values? And when one looks at this, this whole picture here, this is really exciting, because we would make the case that total return is something that can enlarge human flourishing beyond just the numbers. And it's something that we think is is vital to promote here in the 21st century.

Yeah, there's no doubt about it. And yet this is a brand new idea, if any, for most believers that love Jesus and want their values, their faith values reflected in every domain of their lives, and yet they had no idea that could include their deployment of capital through investment. So how would you counsel the average listener today to get started in this? Yeah, one step at a time.

It can be a whole new paradigm shift here. But I would say that the average investor should start by using some of the screening tools that are out there or going with fund managers or other portfolios that prioritize ethical and faith-based values without sacrificing returns. There's a lot of great firms that are out there. We're one of many, and we would just encourage everyone to start to explore what are the options out there. And we're fans of using professional guidance to help make those decisions.

Yeah, very good. We've got about 40 seconds left. Fenny, tie a bow on this for us. Yeah, we are excited about this. We think we're in the early stages of what can be a movement as Christians integrate their faith and their values into their investments.

That integrity is not at odds with our investing, it should enhance our investing, if we're intentional and use professional guidance to build portfolios that honor God, while maintaining that kind of strong growth profile that we're all hoping to achieve. I think that's well said. I appreciate your leadership in this space. Incredible thinking, incredible products there at Eventide. Thanks for your partnership and for being here today. Thanks a lot, Rob.

Great to be with you. Our guest has been Fenny Curavilla. He's co-chief investment officer and senior portfolio manager at Eventide Asset Management. Learn more at eventidefunds.com. All right, your calls are next. The number 800-525-7000. That's 800-525-7000. I'm Rob West and this is Faith in Finance.

We'll be right back. We are grateful for support from Crossmark Global Investments. They are a faith-based firm with a goal of offering values-based investments to help align financial choices and faith, ensuring a portfolio that reflects what matters most. Crossmark does this through investment solutions that span the capital market spectrum from large cap to small cap strategies, including equity, fixed income and balanced strategies. They are led by industry veteran Bob Doll, CFA, a regular guest on the Faith in Finance program. More information is available at crossmarkglobal.com.

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Mike is driving in West Palm Beach. Go ahead, sir. Hey, Rob, how are you today? Good.

Thanks for calling. OK, so my wife and I inherited a house from a family member and it's out of state and we would like to keep it and just use it for, you know, friends and family or, you know, whoever. People from churches, you know, whoever use it. We don't want to like rent it. We don't want to do anything like that. And I didn't know what your thoughts were about, you know, about that in general.

Yeah. Well, obviously it's a blessing to be a recipient of a piece of property. I think you're right to consider in light of your values, not just the financial bottom line, but in light of your values as Christ followers, you know, what is God leading you to? And it could, in fact, be exactly what you're describing. What a blessing to have a place like that for folks to use. I think as you think through that, a couple of thoughts come to mind for me. Number one is where is the property located? It's in Ohio. OK. And you're in Florida. Absolutely.

OK. Yeah. So that's the first thing is just do you have somebody on site in Ohio who could help you to or in fact oversee the property? Because if not, you're a long distance landlord who doesn't receive rent because it's sitting there. I think the second thing is, you know, I appreciate your desire to let friends and family and even church members go stay there. But is that, you know, is the location and the property, you know, some place that would be desirable for those folks where it would actually get used?

We'll come back to that in a second. And then thirdly, you know, it could prove and I'm not saying this is a reason not to do it, but it could prove to be more of a headache than you might think, because if it's unoccupied much of the time, it could be vandalized. You know, things go wrong and nobody's there to find them. If you have a water leak that goes on for weeks, obviously it can create significant damage and you don't know about it.

So that's where the damage comes from as it sets. I mean, sadly, these days it could even fall prey to squatters. I mean, that's happening more often than not. So I think, you know, those are perhaps the things to think about. Who's going to oversee it? You know, what about it being unoccupied a lot of the time and the challenges that come with that? And then thirdly, you know, despite what your intentions are, are there really folks that would use it and get a lot of use out of it to make it worthwhile?

But give me your thoughts on those. So I thought about almost exactly what you said pretty much to the T. I was concerned about the location. It's in it. It is in a good area.

It's not way anyway. It's in a spot that I think people will use it to. It's going to be a little troublesome for us to use it a lot because of the distance.

It's like, oh, you have to fly or do you drive? And so I you know, my wife and I talked about it and we thought that I said we were going to commit to one year. Let's commit to a year and say, hey, if we're going to use it over that course of a year, if it gets used enough as far as the taking care of it.

It's in a very small little community where there are a few people that I contacted in that that have been contacting with me through there that would be able to oversee it. They actually want me to keep it. You know, they want us to keep it. They don't want it to get sold or anything for obviously its selfish purposes. But whatever they're there, they have, you know, the best interest.

They have a vested interest. So I thought about all the things pretty much like you thought, and I just wanted to see if you had any additional thoughts. Yeah, that's helpful.

And I'm glad that we align there as well. I mean, just piggybacking off what you just said, a couple of things come to mind. Number one is I love the idea of you having this kind of trial run because then you're not going through the hassle of selling it. You can always sell it a year from now. And who knows, maybe interest rates are a little bit lower. And so it might even be a little bit more attractive to buyers at that point. You know, if we're in a better interest rate environment and it gives you this one year period to see, are we going to use it?

Are friends going to use it? Family, you know, others from church and you might find six months in or even a year, you look back and say, we didn't really use it. And so we're paying the property taxes and we've got this additional kind of thing to occupy our time and attention, even though it's out of state. It's still kind of in the back of our minds.

I wonder what's going on with the house. And you just decide it's better to let go of it. I think the other thing is just to think through what's possible with that money. I mean, you know, if you don't need it, maybe you sell it and give the money away. I mean, use it to fund a donor advised fund and you could do some really cool things. Or maybe you buy a place that maybe is a little closer or in a more desirable location, someplace that you and the family would really use.

You guys would be super excited about, you know, using it on a regular basis and maybe seeing a little closer to home. So but I think giving yourself some time to figure all that out makes some sense. And then you avoid the transaction costs.

If you if you find out in the end, you're surprised at how much it does get used. Right. Right. Yeah, I appreciate that. That's exactly what I mean.

We thought exactly the same thing. I thought about it. We sold that and bought something in this area that we would probably use a lot more. So, you know, all of that's great. The thing is, the value is not as high as it would be in one of the great, desirable areas. So, you know, I get it.

We would be spending more. Yes. You know what I mean?

It's like, well, we really didn't save anything. Yeah, no, I get it. Totally. Absolutely, Mike. All the best to you, my friend. Thanks for going today. Let me say thanks to my team today. I certainly couldn't do this without the entire cast and crew here at Faith five. But certainly today, Devin Patrick, my producer, Jim Henry, providing great research and Sandy Dickinson handling our phones today. Have a wonderful day and we'll see you next time. Bye bye. Faith and finance is provided by faith by and listeners like you.