Building a Faith-Based Portfolio

Posted by: Leo Marte, CFP®, CKA® | May 2 2025

Implementing a faith-based investing strategy requires more than just aligning values in theory—it calls for practical action. For many investors who want to honor their Christian convictions through their financial choices, building a portfolio that reflects their beliefs can be both rewarding and challenging. The good news is that a growing number of tools and strategies are available to help investors integrate their faith with their investments in a thoughtful and effective way.

Start with a Clear Framework

Before choosing specific investment vehicles, it's important to clarify your overall financial goals, risk tolerance, time horizon, and spiritual convictions. Faith-based investing isn’t one-size-fits-all. Some investors may place a higher emphasis on excluding certain industries, while others focus on proactive engagement or stewardship themes such as sustainability or social impact.

By defining what biblical principles matter most in your investment decisions—whether that’s integrity, care for creation, human dignity, or stewardship—you’ll be better prepared to make consistent and informed choices.

Use of Investment Vehicles: Mutual Funds, ETFs, and SMAs

There are several types of investment products that can help implement a faith-based strategy. Each offers different advantages in terms of diversification, cost, and customization.

Mutual Funds

Faith-based mutual funds pool assets from multiple investors to buy a diversified set of securities. These funds are often professionally managed and may apply value-based screening to exclude companies involved in activities that conflict with biblical values.

Mutual funds can be a good option for investors who want to delegate management while maintaining a values-aligned approach. High Net Worth investors might find mutual funds attractive due to the ability to buy and sell funds without concerns for daily market liquidity. However, fees can vary, and screens may not match each investor’s personal convictions perfectly.

Exchange-Traded Funds (ETFs)

ETFs are similar to mutual funds in diversification, but they trade like stocks on an exchange. They tend to have lower expense ratios and greater liquidity.

Faith-based ETFs are a growing segment offering more flexibility and cost-efficiency, making them attractive to younger or more hands-on investors. Investors must be aware that some of the ETF products in this space are thinly traded and may come with limited liquidity if investments need to be turned into cash quickly. As with mutual funds, the screening methodology should be reviewed to ensure alignment with your values.

Separately Managed Accounts (SMAs)

SMAs provide a customized portfolio managed on your behalf, offering direct ownership of the underlying securities. For faith-based investors, this means you can apply personalized screens, emphasize impact themes, or engage in shareholder advocacy.

SMAs are typically suited for investors with higher account minimums (typically > $10M), but they offer a high level of control and transparency. This can be valuable for individuals or families seeking a tailored approach that aligns deeply with their spiritual and financial goals.

No Perfect Alignment: Navigating the Gray Areas

One of the biggest challenges in faith-based investing is acknowledging that perfect alignment is nearly impossible. Even the best-screened funds or portfolios may include companies that fall short of biblical ideals in some way.

For instance:

  • A tech company may support community health but have political affiliations that raise concern.
  • A healthcare firm may provide life-saving treatments while also engaging in controversial research.
  • A sustainability-focused business may use supply chains that are difficult to fully audit.

Faith-based investing requires discernment. It is less about achieving a flawless portfolio and more about making intentional, prayerful choices that reflect your desire to honor God with your resources.

Balancing Cost and Conviction

Another consideration is cost. Faith-based funds and SMAs may carry higher fees than traditional investment options, due to additional screening, management, or customization.

This raises a key question: how do we balance values and financial efficiency?

Scripture offers insight in Luke 14:28, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” Wise stewardship includes evaluating both the spiritual and financial implications of our decisions.

Here are a few principles to guide this balance:

  • Know what you’re paying for. Some funds charge more because they offer deeper screening or shareholder engagement.
  • Avoid fee-only comparisons. A low-cost fund that ignores your values may cost more in spiritual terms.
  • Don’t let perfection be the enemy of progress. Even partial alignment is a step in the right direction.
  • Work with advisors who share your worldview. A values-aligned advisor can help you understand the trade-offs and make balanced decisions.

Implementing the Strategy

Once you’ve determined your approach and chosen the appropriate investment vehicles, it’s time to implement the portfolio. Here are a few final steps:

  • Revisit your investment policy statement (IPS) to commit to an allocation for the long term.
  • Diversify wisely. Don’t over-concentrate in a narrow segment of the market just to align values.
  • Review holdings regularly. Values-based funds may shift over time. Stay engaged.
  • Pray over your decisions. Faith-based investing is ultimately about faithfulness, not financial performance alone.

Faith Driven Investor, an influential nonprofit in this space, maintains a list of asset managers that incorporate different levels of screening and values. The list should used for reference, and you should conduct your due diligence before investing. If you are looking for help with managing your portfolio, consider becoming a client to receive specific investment advice for your situation.

Conclusion: Stewardship in Action

Building a faith-based portfolio is a meaningful way to integrate your beliefs into your financial life. It’s not about finding a perfect product—it’s about committing to a process of thoughtful, values-driven stewardship.

Whether through mutual funds, ETFs, or SMAs, today’s investors have more tools than ever to put their faith into action in the market. With prayer, discernment, and wise counsel, you can build a portfolio that reflects your convictions and honors the One who owns it all.

"Whatever you do, work at it with all your heart, as working for the Lord..." — Colossians 3:23