BIBL: Keeping The Faith (NYSEARCA:BIBL)

There are many investors who prefer a more socially responsible approach to markets that align with their core values, and in some cases, their faith. It’s more than just performance – it’s a way of expressing your personal beliefs through your money. And if you’re in that camp, the Inspire 100 ETF (NYSEARCA:BIBL) may be worth considering. This fund invests in a diversified basket of US large-cap companies that are deemed to be faith-compatible. The aim is to offer investors a broad equity exposure intended to deliver market returns with an ethically gathered selection of stocks based upon a set of biblically responsible investible investment criteria.

BIBL tracks the Inspire 100 Index, a market-cap weighted index of 100 of the most biblically aligned large US companies, daily screened for compliance with Inspire’s biblical-based indexing criteria. The fund relies on the Inspire Impact Score®, a proprietary scoring methodology that seeks to measure the extent to which a company is a positive influence on people, planet and privacy, by assessing the extent to which it normally aligns the biblically based factors within the social and environmental areas impacting corporate behavior. While not huge at $318 million in assets under management, it’s clearly gotten some solid core investors and attention, with a net expense ratio of 0.35%.

A Look At The Holdings

This is a market-cap weighted fund, so when we look at the holdings, we see that the top positions are ranked by size. The nice thing here irrespective of the faith-focused methodology is that the top positions are not ones you see in more passive market-cap weighted benchmarks.

The position sizing also makes this naturally more balanced, with the top 10 positions making up a little over 33% of the portfolio. This I view positively as it’s very different from what we see now in headline averages where the top 5 stocks are so far outsized relative to other holdings in those market proxies, in turn resulting in much more idiosyncratic risk than investors realize.

Sector Composition and Weightings

One thing worth noting is that this is still heavily exposed to Tech at over 30%, but the top 10 holdings are not as tech-heavy as other market averages, so I think that’s okay. I do like that Industrials have the 2nd largest weight here at 22%. It’s a good counterbalance overall.

Peer Comparison: BIBL vs. PRAY

It’s worth comparing BIBL to an active faith-based ETF, the FIS Biblically Responsible Risk Managed ETF (PRAY). This fund also focuses on avoiding companies that are deemed inconsistent with Christian values, but does so with some risk management on the companies it selects. When we look at the price ratio of the two, we find that the two have largely performed in line with each other. No major difference overall from a pure performance perspective.

Pros and Cons

On the positive side, BIBL provides an opportunity for your investment portfolio to be intentionally impacted by biblical values and principles. BIBL is essentially an ESG-categorized fund from that perspective, and there is increasing demand for products like this broadly. Furthermore, this passively managed fund with an expense ratio of 0.35 percent is inexpensive for garnering exposure to the US large-cap equity market.

The negative? The biblically responsible investing criteria utilized clearly excludes certain companies which, while counter to Christian values based on the fund’s methodology, could have outsized returns and cause underperformance. What’s more, the scoring methodology may also miss certain aspects of Christian values for investors looking to get a pure play there.

Conclusion: Investing with Purpose and Principles

I think Inspire 100 ETF is a good fund for what it does, and even if you’re not as focused on the Christian values side of things, the mix of stocks looks good relative to what you see literally everywhere now. Although some funds have recently emerged that offer narrowly focused faith-based investment opportunities, Inspire was among the first firms to combine biblical values with the broad equity market and to do so at a low expense ratio. Worth considering in my view.

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