Faith Goes Sub-Advised

Terry Flanagan

Faith-based investing, despite being a trend to some, and dismissible to others, is spreading.

Sustainable Growth Advisers (SGA) has recently been selected to manage the New Covenant Growth Fund, an $88 million large capitalization growth stock portfolio for New Covenant Trust Company, a subsidiary of the Presbyterian Foundation.
Connecticut-based SGA is manages approximately $1.8 billion in assets. The firm is employee-owned and focuses on managing portfolios for institutions, such as the Presbyterian Foundation. Additionally, it often acts as a sub adviser to many other mutual fund complexes.
“We were looking for a firm that certainly had an investment philosophy that would compliment us, and our other advisers,” said Paul Stropkay, senior vice president and chief investment officer of New Covenant Trust Company.

New Covenant Trust Company ran an internal equity manager search, focused on “the firm and product, investment team, philosophy, process, and performance,” according to Stropkay.

“We were focused on the experience level of the people at the firm, and wanted low turnover, and a relatively concentrated portfolio,” Stropkay said. “Mostly, we wanted to make sure the firm was allocating to businesses, not just speculating.”

Like most mutual funds, the New Covenant Growth Fund is designed for buy-hold investing, and long term growth. The average holding period within the New Covenant Growth fund is deemed at three to four years.

Perhaps a different caveat is the socially-witnessed principles shareholders have emplaced on the fund.

“Faith based principles are expressed through funds, and that excludes stocks in certain industries; our shareholders are in the interest of supporting socially witness principals, under the guidelines of the Church,” said Stropkay.

The foundation is a non-profit that offers charitable trusts, personal trusts and investment management services, founded on “faith-based” investment principals. Apart from sub adviser SGA, the institutions sponsor New Covenant Funds, a family of faith-based mutual funds.
In the U.S., faith based investing, which may be lumped under the umbrella term SRI (socially responsible investing) is a passing phase for some managers. Global managers, such as those in the MENA (Middle East North Africa) region may know a similar style as investing according to Sharia Law.

“We’re very excited to have been selected by New Covenant for this mandate,” said Gordon Marchand, co-founder of Sustainable Growth Advisers.

“We are confident that SGA will effectively represent the values that are important to their organization. We look forward to working with New Covenant in managing a portion of their investment program.”

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