FUND COMMENTARY
Investors look for ways to make a positive long-term impact by eliminating or supporting companies in their portfolios.
Selection of assets in sustainable investing can be done using various and sometimes overlapping techniques including exclusionary or inclusionary screening and impact investing, among others.
Invest in what you believe. That’s the impetus for a growing universe of investment products including managed portfolios designed to help financial professionals offer their clients investment choices that align with their beliefs.
“There are a lot of different ways that you can build portfolios to align with people’s values,” explained Jeff Branstad, CFA, model portfolio manager. “You have funds that take environmental, social and governance (ESG) considerations into the investment process to varying degrees, you have a wide variety of faith-based products across multiple different faiths and you have products that use norm-based or negative screens to exclude particular industries. At Thrivent Asset Management, we’ve chosen to partner with Christian asset management firms to build model portfolios that include a faith-based perspective.”
A survey released in November 2024 reported that 88% of Christians are interested in having their investments to reflect their values, while 23% say their investments already are reflective of what they believe.1 And it has the potential to be important for years to come, according to a U.S. Bank study conducted in 2024. Older generations, like baby boomers, reported only 30% of respondents were interested in investing according to their values, compared with 45% of Gen-Xers and 59% of millennials.2
If the trend toward interest in faith-based investing in the U.S. continues to grow, financial professionals in the U.S. may want to make plans to meet the challenge.
While values-based funds run the gamut of ethical interests and approaches, faith-based products may appeal to a more focused subset of investors. Thrivent Asset Management manages three products within the Thrivent Faith-Based PortfoliosTM: Moderately Aggressive, Moderate and Moderately Conservative.
Thrivent Faith-Based Portfolios are geared toward investors looking to participate in investment markets while seeking to avoid such areas as gambling, adult entertainment, abortion and the manufacturing or distribution of alcohol and tobacco products.
Thrivent has a long history of managing model portfolios. Although Thrivent Faith-Based Portfolios were launched in July 2020, Thrivent has been managing other model portfolios since 2007.3
“The primary difference between these portfolios and the other portfolios we manage is the investable universe,” said Branstad. “The strategic and tactical asset allocations are generally the same across all our portfolios. But in the case of Thrivent Faith-Based Managed Portfolios, we include Christian asset managers who approach investing with a faith-based perspective.” These underlying managers use exclusionary screening and other socially responsible analyses in their investment approaches.
Can investing in what you believe affect your bottom line? Do exclusionary screens, such as those that exclude certain types of businesses, lead to a drop-off in performance?
“There's been a lot of research done on that, and in general, the answer is: not necessarily,” explained Branstad. “Obviously, excluding certain companies could have short-term negative impacts toward performance. But a lot of people believe that the long-term impact may be positive by eliminating or supporting companies that are in certain types of businesses.”
Although Branstad acknowledges that the specific allocations of a belief-based model portfolio may be a little different than Thrivent Asset Management’s other model portfolios, the overall approach remains the same. He picks funds that fit the exclusionary criteria and then uses them to build portfolios that express the team’s desired asset allocation exposures.
“Within each model portfolio, if the portfolio manager of an underlying fund screens out stocks from a certain sector, they can add back other stocks from that same sector to balance it out,” he said. “For instance, if they screen out some health care companies that don’t meet their criteria, they can offset that by adding back other health care companies—leaving the sector exposure roughly the same.”
The management process goes well beyond asset allocation models. “We also monitor all the underlying managers that we use in the models, including our Thrivent managers, on a daily, monthly, quarterly basis,” added Branstad, “always keeping a close eye on how the models are tracking with their allocation targets and how the underlying managers are performing.”
Branstad said there are three primary components to building managed portfolios: strategic targets, tactical allocations and the underlying managers, listed in order of their potential impact on returns.
“That’s why we undergo this management process,” Branstad added. “If you trust your work, if you do your homework and you make decisions built on solid ground, you give yourself the best chance of meeting your goals.”
Learn more about Thrivent Faith-Based Managed Portfolios.
1 FaithInvest, “Survey finds 88% of Christians want investments to reflect values,” November 2024, (December 10, 2024).
2 SageMint Wealth, “Values-Based Investing: Aligning Your Investment Dollars with Your Core Beliefs, January 25, 2024, (December 12, 2024).
3 Before June 1, 2019, Thrivent Managed Portfolios were offered through Thrivent Investment Management, Inc, an affiliate of Thrivent Asset Management, LLC. Thrivent Asset Management, LLC personnel comprised a committee that made investment recommendations for these portfolios to Thrivent Investment Management during that time. Since the same investment personnel are involved, Thrivent Asset Management, LLC Model Portfolio performance includes results from the periods the portfolios were offered by Thrivent Investment Management.
Investing involves risk, including the loss of principal. The prospectus and summary prospectus for the securities within the model portfolios contain more complete information on the investment objectives, risks, charges, expenses and other information of the fund, which investors should read and carefully consider before investing. To obtain prospectuses, contact your Regional Investment Consultant or call 800-521-5308.
Faith-Based Investment Strategy Risk. The Faith-Based Model Portfolios’ investment strategy limits the types and number of investment opportunities available to the models and, as a result, the allocations among asset classes may vary from other TAM model portfolios and strategies that do not have a Faith-Based focus. In addition, the Faith-Based models may underperform other strategies that do not have a Faith-Based focus. Further, the Faith-Based models’ investment strategy may result in the model allocating to underlying funds that hold securities or industry sectors that underperform the market as a whole or underperform other strategies screened for, or that do not include, securities that conflict with the Faith-Based focus of the models. While TAM monitors the allocation and performance of the underlying funds selected for the models, TAM does not monitor whether the underlying funds include securities that conflict with the Faith-Based focus of the models. Further, if the models include underlying funds that liquidate securities for violations of one or more screening criteria, such liquidation could negatively impact the performance of the underlying fund and the models.
Thrivent Asset Management, LLC’s role is providing sponsors of managed accounts with nondiscretionary investment advice in the form of model portfolios. The implementation of or reliance on a model portfolio is at the discretion of the managed account sponsor. Thrivent Asset Management, LLC is not providing personalized investment advice or investment recommendations and will not make any representations about the suitability of a model portfolio for any investor. Thrivent Asset Management, LLC does not have investment discretion over, or place trade orders for any portfolio derived from this information.
Thrivent Managed Portfolios will include Thrivent Mutual Funds. Asset management services for the Thrivent Mutual Funds are provided by Thrivent Asset Management, LLC, an SEC-registered investment adviser, and receives fees for its services as disclosed in the applicable Funds’ prospectuses and Statement of Additional Information. As the investment adviser for Thrivent Mutual Funds, Thrivent Asset Management, LLC has greater knowledge of these funds and has a tendency to prefer Thrivent Mutual Funds over non-affiliated funds, which may be a conflict of interest. Thrivent Mutual Funds included in the Faith-Based models do not incorporate an exclusionary screening process, but do not own securities that may conflict with certain values as described above. Thrivent and its subsidiaries may earn distribution and other fees, including 12b-1 fees, in connection with Thrivent Mutual Funds. At this time, Thrivent Asset Management does not receive any direct fees for the provision of model portfolios, although it could receive such fees if negotiated with the program sponsor. For more information about potential conflicts of interest, read the Thrivent Asset Management, LLC Form ADV – Part 2 Brochure. Thrivent Distributors, LLC, a registered broker-dealer and member FINRA, is the distributor for Thrivent Mutual Funds. Thrivent Distributors, LLC, and Thrivent Asset Management, LLC are subsidiaries of Thrivent, the marketing name for Thrivent Financial for Lutherans.
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