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Putting Values-Based Investing at the Core of Your Offering

By Crucial Clips     September 26, 2018
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Jul. 27, 2018 

GARRETT KEYES, REPORTER, FINANCIAL ADVISOR IQ: Hello. My name is Garrett Keyes. I'm a reporter for Financial Advisor IQ, and I'm here today with David Spika, president of GuideStone Capital Management. For GuideStone, what does values-based investing mean?

DAVID SPIKA, PRESIDENT, GUIDESTONE CAPITAL MANAGEMENT: Values-based investing really is the core of who we at GuideStone. So we're a 100-year-old organization that was founded to provide financial support to Baptist pastors and their widows. So we're a Christian organization, so the values that we incorporate into our investments are values that we truly believe in and that undergird our entire culture, our entire firm.

GARRETT KEYES: And as part of this now, you're offering values-based portfolios?

DAVID SPIKA: Mm-hmm.

GARRETT KEYES: And, I guess, are those portfolios structured as mutual funds, or are they different investments?

DAVID SPIKA: Yes. We have a family of mutual funds. We're actually the largest Christian-screened mutual fund family in America today, with about $13 billion in assets.

GARRETT KEYES: And when you guys decided to introduce these mutual funds, was it driven from a client-base perspective -- a client-based need for them -- or was it from a business side, or was it a combination of the two?

DAVID SPIKA: I would say it was a combination of the two, Garrett. So in 2012, we won a Lipper award for the best small fund family in America, and nobody knew who GuideStone was. Because at the time, we only managed assets for Southern Baptist entities. We didn't open them up to the broad investment market.

And so we realized that we had a very strong product, we were good at managing money, and that it was something that we felt like there would be a demand for in the open market. And as we've opened it up over the past few years, we found there is a demand and it's growing quite rapidly at this point.

GARRETT KEYES: How do you apply the values-based screens that you guys have developed to your portfolios?

DAVID SPIKA: So there are five screens that we apply to our portfolios. Alcohol, tobacco, gambling, pornography, and abortion. And the way that we apply those screens is based on companies that we believe are publicly recognized as operating in those industries, or companies that are publicly recognized as operating in industries that are incompatible with the values of GuideStone. And so we have a team of analysts that identify companies that meet those criteria, and then we give those lists of restricted companies to our sub-advisors and they're restricted from buying those companies.

GARRETT KEYES: And so in offering these values-based portfolios, their client demand for these types of investments? Are clients increasingly wanting to have their investments screened?

DAVID SPIKA: Absolutely. I think there's demand growing for all types of values-based investment. Obviously, the younger generation is much more focused on investing in areas that support their personal values. They don't want to own companies that are engaged in industries that they disagree with. They want to own companies that have a positive impact on society. And so we are seeing demand there. And we're really focusing on supporting the physical and emotional well-being of society. And we believe our investment philosophy does support that.

GARRETT KEYES: Thank you, David.

DAVID SPIKA: Thank you, Garrett. I appreciate being here.