Vatican Unveils Catholic Values Equity Indexes: Faith-Based Investing Goes Mainstream
The Holy See just blessed a new asset class. Forget sin stocks—now you can track your portfolio's piety with the Vatican's freshly minted equity indexes.
Sacred Screens, Secular Gains
These aren't your typical ESG funds with vague sustainability goals. The Vatican's framework draws direct lines from centuries-old Catholic social teaching to modern corporate behavior. Think supply chain ethics over carbon credits, human dignity metrics over quarterly profit guidance.
The algorithm isn't praying for returns—it's screening for them. Companies facing controversies around labor practices, environmental damage, or weapons manufacturing get filtered out faster than a sinner in confession. The indexes target firms aligning with Catholic principles on life, family, and social justice.
Faith as a Financial Filter
It's a bold move in a market obsessed with secular growth. By creating a standardized benchmark, the Vatican gives asset managers and pension funds—including its own—a clear roadmap for values-based allocation. Suddenly, aligning investments with doctrine isn't just possible; it's measurable.
One cynical fund manager might call it divine intervention for underperforming portfolios—finally, an excuse for mediocre returns that even God can get behind.
This isn't about avoiding hellfire; it's about harnessing faith as the ultimate due diligence. In a world of ethical gray areas, the Church just drew a hard line in the financial sand.
Catholic-aligned benchmarks expand ethical investing options
According to IOR, the Morningstar IOR Catholic Principles Eurozone Index and the Morningstar IOR Catholic Principles US Index comprise 50 issuers each and are focused on medium- and large-cap companies. They are fully compliant with the IOR Investment Policy and are designed to incorporate future developments in the Institute’s ethical Catholic investing approach.
Giovanni Boscia, Vatican Bank deputy director general and CFO stated, “Having benchmarks built in accordance with recognized Catholic ethical criteria allows us to make our performance assessment and reporting processes even more rigorous and transparent […] This initiative reaffirms our commitment as a financial institution serving the Church, further strengthening the role of the [Vatican Bank] as a reference point for the Catholic world.”
The Eurozone fund counts semiconductor supplier ASML Holding and telecommunications company Deutsche Telekom among its top holdings. On the other hand, the US-based index’s largest holdings include Meta Platforms and Amazon.
These rollouts have opened up the possibility that the indexes could be licensed for use in an exchange-traded fund. Globally, investors’ appetite for ETFs and other thematic investment products is on the rise.
The global ETF market increased nearly 30% to top $14 trillion in 2024, per PricewaterhouseCoopers. According to a PwC report, the combined value of those funds could hit as much as $30 trillion by 2029.
The MOVE comes as the Vatican Bank works to reform its image after a series of scandals. The Holy See-linked financial institution has faced several allegations of money laundering and ties with organized crime, particularly after the collapse of Milan-based Banco Ambrosiano in 1982. In 2021, former Vatican Bank president Angelo Caloia was found guilty of money laundering and embezzling millions of euros in connection with his role at the institution.
Meanwhile, the Vatican also maintains its own investment portfolio. It earned 38.1 million euros ($45.41 million) in profit from investments in 2024, according to its latest financial statement. Catholics constitute the largest religious group in the US, with more than 50 million Catholic adults nationwide.
Catholic based investing growth amid ESG largest outflows
Meanwhile, investment products rooted in social responsibility and other themes are appealing to a certain slice of investors. The Ave Maria Mutual Funds, a fund family that allocates capital in accordance with Catholic teachings, said it had $3.8 billion in assets under management as of last year, per its website.
Additionally, a US-based ETF, the S&P 500 Catholic Values Index, is structured similarly and has a market value of over $1 billion (€840mn). Nvidia and Apple are the top holding companies in the index, accounting for 8.2% and 6.8% of the assets, respectively.
Overall, ESG and sustainable funds saw a sharp reversal in investor sentiment and performance last year. Morningstar reported approximately $84 billion in outflows of global sustainable funds last year, a change from about $38 billion in inflows in 2024.
Outflows occurred across major regions, including Europe, the US, and the rest of the world, with only about 26% of ESG indexes outperforming non-ESG counterparts. Additionally, data shows continued net outflows of roughly $27 billion in Q4 alone. However, a total sustainable fund assets still ROSE modestly due to market gains.
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