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GOSHEN, IND — Investors who believe that the bottom line should include considerations of people and planet, as well as profit, have often fallen into one of two camps.
On one side, there are progressive investment companies focused on issues related to environment, social and governance issues (ESG, a term that has overtaken socially responsible investing, or SRI, as the common industry buzzword). Those investors are motivated by an ideal that doesn’t stem from religious convictions.
On another side, a series of mutual fund families motivated by faith concerns sprung up, reflecting more traditional, conservative values that emphasize negative screening or avoidance of certain things.
Praxis Mutual Funds, which celebrates its 25th anniversary this year, walks a middle path, says company president Chad Horning. “From the very beginning, like Anabaptists, we have been a third way for people.”
When Praxis launched its first fund offerings in early 1994, there were few options for people who wanted to ensure their investments did not conflict with their values.
Praxis is part of the Everence Financial group of companies. Everence Capital Management is the Advisor to the Praxis Mutual Funds.
Praxis was set up to extend Everence predecessor Mennonite Mutual Aid’s asset management services to the people in the pews. “It clearly came out of the faith,” Horning said. Praxis’ founders were concerned with “how would a Mennonite integrate their faith into their investments?”
Carving out that niche hasn’t always been easy. Some progressive groups view Praxis as being too religious, while more conservative groups are concerned Praxis may be too liberal.
“Praxis has been able, I think, to drive down that middle, not without some tensions, but to appeal to a broad swath of people,’’ Horning said.
The company has enough customers in each of those camps that the firm has been able to continue to grow, he said. Parent firm Everence serves two dozen different religious denominations that span the theoogical spectrum.
Praxis had assets under management of $1.279 billion at the end of 2018, down slightly from $1.308 billion a year earlier. While the company had strong sales during the year, declining markets took a toll at year-end before rebounding in early 2019.
Praxis launched three funds in 1994: a US growth fund, a bond fund and an active international fund.
The firm now has five funds plus three additional fund of funds that invest in the underlying five.
One of the growing edges for the company is its fixed income fund, known as the impact bond fund (formerly intermediate income).
Over the past five years, Praxis has participated in the market for bonds issued by governments and others that have specific financial and social goals attached to them, such as sustainable energy.
These instruments are broadly known as green bonds, although that description is somewhat misleading as it refers to one specific niche, Horning said.
Close to 30 percent of Praxis’s assets are invested in positive impact bonds issued by organizations such as the World Bank, benefiting social concerns that include housing and renewable energy.
“We believe we can do this and not have to settle for concessionary (less than market) rates.”