FIS Faith Income ETF (FTHB)

The FIS Faith Income ETF (FTHB) is an investment fund holding stocks and bonds of companies screened for alignment with Christian and Judeo-Christian values — excluding industries like gambling, tobacco, abortion services, and companies with poor labour or environmental records — and prioritising those with strong income streams.

Faith-based investing and values-driven screening

For many investors, the question of how their money is deployed is not purely financial. An investor might hold religious beliefs that make them uncomfortable owning shares in companies that manufacture alcohol, gambling equipment, contraception, or abortion-related services. Others might object to investing in firms with poor environmental records, exploitative labour practices, or links to weapons manufacturing. These concerns have existed for centuries — religious institutions have long screened their endowments to avoid what they consider immoral uses of capital.

FTHB operates in that tradition, but adapted to the modern ETF structure. The fund explicitly screens out industries and practices deemed incompatible with Christian and Judeo-Christian values. It also applies broader environmental, social, and governance criteria similar to those used in the wider “ethical investing” or “socially responsible investing” movement.

How the screening works

The fund’s prospectus lays out its exclusion screens. Companies in gambling, tobacco, adult entertainment, abortion services, and contraceptive manufacturing are automatically excluded. Companies with significant ties to alcohol production or distribution are typically excluded, though some lower-risk positions might be retained. The fund also screens on labour practices, excluding companies with persistent patterns of wage violations or unsafe working conditions, and on environmental grounds, steering away from major polluters or companies with poor climate-change practices.

The result is a narrower universe of potential holdings than the entire stock market. A company must pass the faith-based screens, the labour and environmental screens, and demonstrate adequate corporate governance — independent board oversight, appropriate executive pay, transparent disclosure — before it gets included.

The portfolio and income focus

Within that screened universe, FTHB prioritises companies and bonds offering strong income — dividend-paying stocks and investment-grade corporate or government bonds. The portfolio is typically a mix of roughly sixty to seventy per cent equities and thirty to forty per cent bonds, a balanced approach designed to generate a higher income yield than the broad stock market while reducing volatility compared to an all-equity portfolio.

The equity portion holds large dividend-paying companies: consumer staples, utilities, healthcare firms, industrials, and banks that pay steady, reliable dividends. These tend to be mature, established companies with long histories of returning cash to shareholders. The bond portion holds investment-grade corporate bonds and, sometimes, government bonds.

A typical holding might be a utility company with a strong environmental record and fair labour practices, or a healthcare firm without exposure to controversial procedures. The fund avoids volatile, high-growth companies, since such firms typically reinvest all profits and pay no dividend. That means FTHB will naturally lag in markets where high-growth technology stocks dominate, but it will hold up better in periods when income and stability are valued.

Costs and yield

FTHB has an expense ratio — an annual management fee — in the range of 0.35 to 0.50 per cent, which is typical for an actively managed ETF with screening and research costs. That is higher than a passive index fund, but the active screening adds value for investors who want to ensure alignment with their values.

The fund distributes income quarterly or monthly, with a yield — the annual distribution divided by the fund price — typically between three and five per cent, depending on prevailing interest rates and dividend levels. That is higher than the yield on the broad S&P 500, reflecting the portfolio’s tilt toward dividend-paying and bond holdings.

Risks and limitations

The most obvious risk is that screening narrows the investment universe and potentially sacrifices returns. By excluding certain industries and companies, the fund may miss opportunities that an unrestricted investor would capture. In periods when excluded sectors — say, tech stocks or speculative growth — drive market returns, a values-screened fund will lag. Conversely, when cyclical stocks or dividend payers lead, the fund may outperform.

Defining “faith values” is inherently subjective. Different investors hold different religious and ethical beliefs, and a fund’s particular screening criteria will not align perfectly with every shareholder’s personal values. Some investors might object to energy holdings, others to healthcare companies involved in specific practices, still others to defence contractors. FTHB’s criteria reflect one interpretation of Christian and Judeo-Christian principles, not a universal standard.

Concentration risk exists, since the screened universe is narrower. The fund’s top holdings might make up a larger slice of the portfolio than in an unscreened fund, meaning individual company-specific risks matter more.

Finally, like all income-focused funds, FTHB is sensitive to interest-rate changes. Rising rates depress bond prices and also tend to lower dividend yields on stocks as companies adjust payout levels or as investors shift capital to higher-yielding bonds. Falling rates have the opposite effect.

Style and market-leadership risk

FTHB is oriented toward value stocks and income, which means it will underperform in markets led by growth and momentum. The technology boom of the late 1990s and again from 2019 onwards saw ultra-low-valuation and dividend-free stocks soar, and a values-screened income fund would have underperformed significantly. Patience and a long-term horizon are essential.

Who this fund is for and how to research it

FTHB appeals to investors who want their capital deployed in ways consistent with their faith and ethical beliefs, and who are comfortable accepting potentially lower returns in exchange for values alignment. It is not for investors who prioritize raw returns above all else, nor for those indifferent to the sectoral and ethical composition of their holdings.

Review the fund’s prospectus and screening documentation to understand exactly which industries are excluded and which labour and environmental criteria are applied. Compare FTHB’s yield to other income-focused funds and to the broad market to assess whether the values-alignment premium — the return sacrifice — seems reasonable. Evaluate the fund’s past performance relative to dividend-focused or balanced funds to understand its typical under/outperformance in different market environments. Finally, be honest with yourself about whether the fund’s screening criteria actually align with your personal values, or whether you might find other excluded companies or included companies objectionable.