As an investor, I often explore faith-based investment options that align with my values. Ave Maria Mutual Funds stand out as a popular choice for Catholic investors and those who prioritize socially responsible investing. But are they a good investment? To answer this, I will analyze their performance, fees, ethical screening process, and compare them to conventional mutual funds.
Table of Contents
What Are Ave Maria Mutual Funds?
Ave Maria Mutual Funds are a family of Catholic faith-based funds managed by Schwartz Investment Counsel. They adhere to Catholic moral and social teachings, avoiding companies involved in abortion, contraception, pornography, and other activities conflicting with Church doctrine.
The fund family includes:
- Ave Maria Growth Fund (AVEGX)
- Ave Maria Value Fund (AVEVX)
- Ave Maria Bond Fund (AVEFX)
- Ave Maria Rising Dividend Fund (AVEDX)
Ethical Screening Process
Ave Maria employs a two-tier screening process:
- Negative Screening – Excludes companies violating Catholic principles.
- Positive Screening – Favors firms with strong Catholic leadership or ethical business practices.
Performance Analysis
Historical Returns
To assess whether Ave Maria funds are good investments, I compare their performance against secular benchmarks. Below is a 10-year annualized return comparison (as of 2023):
| Fund Name | 10-Yr Annualized Return | Benchmark (S&P 500 for Equity Funds) |
|---|---|---|
| Ave Maria Growth (AVEGX) | 9.12% | 12.03% (S&P 500) |
| Ave Maria Value (AVEVX) | 8.45% | 11.20% (Russell 1000 Value) |
| Ave Maria Bond (AVEFX) | 2.89% | 3.25% (Bloomberg U.S. Aggregate) |
Data sourced from Morningstar (2023).
The funds underperform their benchmarks, which is common among faith-based funds due to their exclusionary screens. However, past performance doesn’t guarantee future results.
Risk-Adjusted Returns
Using the Sharpe ratio (S = \frac{R_p - R_f}{\sigma_p}), where:
- R_p = Portfolio return
- R_f = Risk-free rate (e.g., 10-year Treasury yield)
- \sigma_p = Portfolio standard deviation
Ave Maria Growth Fund (AVEGX) has a Sharpe ratio of 0.68, while the S&P 500’s is 0.92. This suggests lower risk-adjusted returns, but ethical investors may accept this trade-off.
Expense Ratios and Fees
Ave Maria funds have expense ratios ranging from 0.79% to 0.94%, higher than many index funds (e.g., Vanguard S&P 500 ETF at 0.03%). The table below compares fees:
| Fund Name | Expense Ratio |
|---|---|
| Ave Maria Growth (AVEGX) | 0.89% |
| Ave Maria Value (AVEVX) | 0.94% |
| Fidelity 500 Index (FXAIX) | 0.015% |
Higher fees erode returns over time. For example, a $10,000 investment growing at 7% annually over 30 years:
- With 0.89% fee: Final value = 10,000 \times (1.07 - 0.0089)^{30} \approx \$57,450
- With 0.015% fee: Final value = 10,000 \times (1.07 - 0.00015)^{30} \approx \$76,123
The difference is $18,673—a significant cost of ethical investing.
Tax Efficiency
Ave Maria funds are not tax-efficient compared to ETFs. Their turnover ratio (how frequently assets are bought/sold) is higher, leading to capital gains distributions. For taxable accounts, this creates an additional tax burden.
Who Should Invest in Ave Maria Funds?
Pros:
- Alignment with Catholic values – Ideal for faith-driven investors.
- Active management – Potential to outperform in certain market conditions.
- Diversification – Offers equity, bond, and dividend-focused options.
Cons:
- Higher fees – Drag on long-term returns.
- Underperformance – Historically lags secular benchmarks.
- Limited diversification – Excludes many large-cap companies.
Alternatives to Ave Maria Funds
For investors seeking ethical investments without high fees, consider:
- Catholic ETFs – Like the Global X S&P 500 Catholic Values ETF (CATH) (Expense Ratio: 0.29%).
- ESG Index Funds – Such as iShares ESG Aware MSCI USA ETF (ESGU) (Expense Ratio: 0.15%).
Final Verdict
Ave Maria Mutual Funds are a good investment only if religious alignment outweighs financial performance for you. If maximizing returns is the priority, low-cost index funds or ESG ETFs may be better.
