John M. Grondelski
IN GOD WE TRUST:
MORALLY RESPONSIBLE INVESTING
By George P. Schwartz with Michael O. Kenney
TAN Books, 2018
266 pages, $29.95
To order: tanbooks.com or (800) 437-5876
George Schwartz is the chairman, CEO and a founder of Ave Maria Funds, which describes itself as “America’s largest family of Catholic mutual funds built on pro-life beliefs.” This book treats “Morally Responsible Investing” (MRI).
MRI can be controversial. Some claim that fiduciary responsibility is purely about getting investors the best return for the buck; investment decisions should be driven purely by bottom lines. Even Schwartz admits, “I may be the world’s most enthusiastic proponent of Morally Responsible Investing, but I have to admit that MRI was not my idea. There have been times in my career when I did not purchase a certain stock because I disliked the firm’s practices (there were other times when I held my nose and bought anyway, because the numbers were just too attractive to ignore). But I had never tried to combine securities analysis with moral judgment in any systematic way. I was skeptical about funds created for the purpose of investing ‘responsibly.’ For me, social responsibility and stock market returns were two distinctly different issues. I held the common view that a company’s duty was to deliver profit to its shareholders, who are free to support whatever charitable initiatives or social objectives they like — one having nothing to do with the other. That view was challenged in a serious way one morning in January of 2001 [by Tom Monaghan and Bowie Kuhn].”
He then realized that investment could be both about doing good and doing well.
Socially conscious investment has grown in recent years. Much of what passes for it usually involves environmental policies or staying out of some countries (apartheid South Africa) or sectors (diamond mining for war profit). What was lacking were mutual funds that explicitly took account of Catholic concerns, i.e., steered clear of abortion and pornography.
Catholics make up a quarter of the U.S. population and, by all measures, have become increasingly affluent. There was clearly a niche for a successful mutual fund catering to their moral concerns. Thus was born Ave Maria Funds.
The subjects covered in this book are all over the place: how Ave Maria was born and the people behind it; Schwartz’s own background; the principles of good investment (like long-term holdings and perspectives, buying when prices are low, and what to look for in a solid company beyond the quarterly bottom line); capitalism in American history; why the siren song of “socialism” suddenly sounds sweet; what the Church and American culture say about abortion and pornography; Michael Novak’s triad of “democratic capitalism” (limited government, free markets and moral cultural underpinnings); and biographies of some of Ave Maria’s deceased advisers (Kuhn; Novak; and Phyllis Schafly).
It’s exactly that “being all over the place” that is my problem with the book. I am not always sure what the book wants to do. Is it a book-length prospectus for Ave Maria? (It includes a chart on the funds’ returns, which, given a book’s typical shelf-life, is likely to be quickly obsolete). I perked up when Schwartz starts talking about what to look for in good companies (low debt ratios, consistent return, good management). He makes interesting points about how American history has been driven by investment (somebody had to pay for the Pilgrims’ progress).
But the Ave Maria focus seems overly dominant, and Schwartz seems to leave some obvious questions hanging. For example, he provides a chart showing how stocks have historically offered the best investment returns: $1 invested in 1927 might be worth $7,353 today. But somebody old enough to invest a dollar 92 years ago would most likely not be worried about taking his gains: the actuarial table probably overtook the returns chart.
John M. Grondelski, Ph.D., Fordham,
writes from Falls Church, Virginia. All views are exclusively his.