Personal Index Portfolios: Faith-Based Investing

Your faith can be part of the investment conversation without assuming every investor shares the same priorities. Start with the preferences you want considered, then review what can be implemented alongside your retirement needs, costs and diversification.

What is it?

Faith-based investing considers how investment holdings fit your religious beliefs. Some investors request exclusions related to gambling, alcohol or adult entertainment; others focus on different products, conduct or activities. Priorities can differ even within the same faith tradition, so the starting point is your preferences rather than a presumed shared screening standard.

If you use religious guidelines, such as the USCCB guidelines published in 2021, we can discuss which preferences you want considered. We review the requested exclusions, available implementation and trade-offs before agreeing on an approach. This is not certification that a portfolio meets every requirement of a religious standard.

How does it work?

Personal Index Portfolios can use individual stocks for U.S. large-cap exposure and low-cost ETFs for other exposures. Direct ownership lets us discuss exclusions for the stock allocation instead of relying only on a fund's screening policy.

Direct ownership can provide more choice about which individual stocks to hold or exclude. In taxable accounts, it can also create opportunities for tax management, but the value depends on your holdings, costs and tax circumstances. These choices do not make direct ownership a better fit than an ETF for every investor.

When building your faith-based portfolio, we begin with individual stocks from an index, such as the S&P 500, and apply your selected screens. The portfolio is designed to limit tracking differences subject to those screens and other constraints. Exclusions can change diversification and cause performance to differ from the index, positively or negatively.

Only agreed exclusions that fit the allocation are documented for implementation. ETFs used for other exposures may still own excluded companies, and not every requested guideline fits every portfolio. Preferences are considered alongside retirement needs, costs, taxes and diversification, not as a guarantee of index-like performance.

Why index portfolios?

Personal Index Portfolios start with index-based investing, then consider agreed stock-level preferences and optional active tax management. The aim is to build an approach that fits your financial priorities, not to promise market-beating returns.

We focus on practical portfolio decisions:

• your asset allocation
• your agreed faith-based preferences
• applicable tax considerations
• portfolio costs

We document these in a written Investment Policy created specifically for you. Our investment philosophy is based on indexing; we are not stock pickers or market timers. Our role is to manage your portfolio according to this written plan, as your fiduciary.

How much does it cost?

There are two elements to understanding the costs of faith-based investing.

• Fees
• Performance vs an index benchmark (performance risk).

Fees

We provide Personal Index Portfolios as part of our advisory service. This means environmental, social, and faith-based screens are included at no additional cost above our investment advisory fee. For optional active tax management in taxable accounts, Altruist, our custodian, charges up to 0.10% per year on the enrolled assets for its tax-management tool, separate from our advisory fee; Integrity Financial Planning receives no part of it.

Compare the costs that actually apply to your account: the advisory fee, underlying fund expenses and any separate customization or platform charges. Providers and programs differ; a published maximum or an individual product's expense ratio is not evidence of what advisers typically charge. IFP is not necessarily the least expensive option.

For clients with assets under management under $500,000, the Advisor reserves the right to charge an hourly fee for financial planning.

Owning an ETF does not let you remove an individual company from that fund's underlying holdings. This limits the scope of exclusions applied through direct ownership.

Performance

Exclusions can change diversification and cause returns to differ from an index, positively or negatively. Discuss how the agreed preferences affect the stock allocation, which ETF exposures remain and how you will review the approach with Todd.

How do I get started?

Start with the preferences you would like considered and the questions you want answered. Explore the values-based approach and its limits, then schedule a free, no-obligation introductory meeting with Todd to discuss whether our approach could fit.

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This content is developed from sources believed to be providing accurate information and provided by Integrity Financial Planning, LLC and Clout by TIFIN. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.