The Praxis family of mutual funds is among the oldest faith-based investment managers in the U.S., quietly and steadily taking care of its customers from its home base in the Midwest.
Today, the Goshen, Indiana-based company is slowly being discovered, as its decades-long focus on Christian values intersects with the impact and sustainability movements. Mark Regier, vice president of stewardship investing, said in an interview with Equities that the company has had 10-plus years of net inflows, as people are seeking out less-volatile investments that are a force for good in the world.
The company offers five mutual funds, excluding money-market and lifecycle funds. All set aside 1% of assets for community investing, one of seven impact strategies the company follows. (The six others are values and ESG, proxy voting, ESG integration, positive impact bonds, company engagement, and advocacy and education.)
I spoke with Regier, who studied theology and ethics, on Praxis’ growth, how faith-based investing led the trend of impact investing, and his outlook on the younger generations’ desire to create change in the world.
Q: Faith-based investing seems to intersect with sustainable investing. Where do those two meet — and not meet?
A: We just crossed into our 30th year at Praxis. We’re probably the oldest faith-based investment firm. Everence, our parent company, is 75 years old. And it grew out of a desire for people to manage their resources, with insurance, and now a trust company, a donor-advised foundation, donor-advised funds, a banking unit, and then the Praxis mutual funds.
We ask ourselves, how do we do things in life that protect us from risk to prepare us for the future? How do we provide for our institutions in a way that aligns with our values? That way, it’s a very natural evolution of faith-based investing into the sustainability space.
We’re part of the Interfaith Center on Corporate Responsibility, an organization that brings together faith-based and socially responsible institutional investors. So we are in the world of Christianity. We believe that Christ’s gospel had a lot of social teaching. These aren’t necessarily the words we use, but the spirit of the question “What would Jesus do?” is important to us on a regular basis.
This is why we call our work at Praxis “stewardship investing.” It comes from this idea that we are to be stewards of the resources that God has given us.
We’re co-stewards with our clients in stewarding resources for God. We are partners to help them there. We try to operate in what we call shared values, which is this idea that as a community, we focus on things that we believe and share. That includes things like caring for creation, which expresses itself on climate change, work on environmental justice, work on issues of inequality. DEI has become a bad word in certain circles; for us, it’s still very important, especially the values behind it. It’s about a diverse community that listens to one another, inclusion is something that we should work at, equity is understanding the relationships of the past and how they shaped the present.
Q: It seems as if there’s a bit of the famous protestant practicality here.
A: Our products are made for people like teachers, pastors and mission workers – and everyday folks who need to save for retirement, parents who want to put their kids through school, and so forth.
Our products are very practical. We offer optimized indexes that are consistent. Do we shoot out the moon? No. Our goal is to stay by the benchmark. But over time, what we’re finding, is that we’ve been having record sales years. We’ve had over 10 years of positive net flows. No one in the faith-based community has that record.
That is, in part, because of the type of products we have. We’re finding that the systems of advisers have been turning to model portfolios and they like the consistent performance. So we’ve benefitted from that.
Q: In your mutual funds, 1% of assets is set aside for community development – how does it work?
A: This is an investment-portfolio way to help people on the margins, as Jesus encouraged. The goal is to lend the funds to organizations doing good work and then receive funds back. The returns overall are below market, but they are safe. These aren’t gifts but investments. It’s also practical in that folks can be doing community development, through a traditional mutual fund, without having to do the research themselves. At Praxis, we have seven impact strategies, and community development is one of them. And this fits that strategy.
Q: Praxis has what’s called an Impact Bond Fund. It’s the only mutual fund with “impact” in the name. How is this fund different?
A: It fits into the intermediate bond category, the part of your portfolio where you have a bond fund. The difference here is that we put extra energy into impact bonds. These are market-rate, and we choose the ones in the world that do positive things — it can be solar, wind, affordable housing.
Q: Young people today are idealistic and active. And they’re a future tailwind behind sustainable investing. How do you see things playing out?
A: We’re behind this movement that money can be part of the positive energy that you want to put out in the world. Young people have more expectations. They want things more customized. But their learning paths will be that it won’t be as easy or as productive as they think.
At the very least, we should understand the risks of ESG concerns, not as an agenda, but how our investment are affected by, and are affecting, the world.
In the faith-based side, we struggle folks with people who think ESG is a dirty word, like they think DEI is. We work with them to overcome these notions. It is the faith community that has been working hard to promote these ideals. In fact, ESG grew out of the question that we’ve been trying to answer for 200 years: How does my money intersect with other things in the world, what do I need to know about it, and what do I do about it?
There may be disagreements on the details, but it shouldn’t be on where we’re going. Everyone needs to know the risks in the world. We like to step back from the noisemakers and the political folks.
Q: How do you convince people on the benefits of impact investing?
A: We try to show them the connection between our values and how they can use that for impact.
We’re trying to show people how you can get things done through engagement, through advocacy with government agencies on disclosures. These things take time and effort.
We live in an age of quick responses to campaigns – social media and other things – but the reality is that a lot of this stuff takes good, old-fashioned sit-downs with folks and see where they’re coming from. Part of our job is how we empower people inside the company to make the change even when the company doesn’t want to.