Inspire 500 ETF (PTL)

The Inspire 500 ETF, trading as PTL, is the product of Inspire Investing’s effort to bring faith-based, values-aligned investing into the exchange-traded fund space. The fund holds roughly 500 large and mid-cap US stocks chosen according to a screening methodology based on biblical and values-based principles rather than pure market-cap weighting. Inspire describes this as “faith, family, and freedom” investing — it excludes companies involved in abortion, alcohol, gambling, tobacco, weapons, and other activities its prospectus identifies as contrary to biblical principles, while also considering environmental stewardship and other positive values-aligned factors. PTL is neither a pure values-based thematic fund (which might hold only a narrow set of “green” or “ESG” stocks) nor a broad market index (which holds every large-cap company regardless of business).

The origins of faith-based investing and Inspire

Values-based investing is not new. Religious institutions, endowments, and socially conscious investors have long screened holdings to avoid companies or industries they opposed on moral or ethical grounds. Protestant churches excluded tobacco stocks long before tobacco’s health risks were widely accepted. Catholic institutions developed screens excluding contraception and abortion-related businesses. Jewish investors applied Torah-based principles to investment selection.

Inspire Investing, founded in 2016, sought to formalize and democratize this approach through ETFs. The firm recognized that many retail investors wanted to align their investment choices with their faith and values but faced barriers — managing such a portfolio individually was time-consuming, and mutual funds with explicit faith-based mandates often charged higher fees than broad indices. An ETF could offer low-cost, tax-efficient, broadly diversified exposure to US equities while applying faith-based screens transparently.

PTL was designed as the firm’s flagship — a large, diversified holding that covers broad US equity exposure through a values lens, rather than concentrating on a narrow sub-sector like renewable energy or defense-free companies. The goal was to show that values-based investing could deliver competitive returns across an entire market segment without sacrificing diversification or liquidity.

How the screening process works and what gets excluded

The methodology begins with a universe of large and mid-cap US equities and applies a multi-stage filter. First, Inspire identifies companies involved in the excluded categories: abortion and contraception services or products, adult entertainment, alcohol production, gambling, marijuana, tobacco, weapons and military contracting. These companies are removed entirely.

The screening also evaluates positive values — environmental stewardship, governance quality, labor practices, and community impact. A company might pass the negative screens (not excluded for any prohibited activity) but be weighted differently or excluded based on poor environmental practices or governance issues.

The result is a portfolio of roughly 500 companies that have passed the values filter and represent a diverse slice of large and mid-cap US business — healthcare excluding abortion-related segments, technology, financials, industrials, consumer goods, energy (excluding weapons), and utilities. The process is rules-based and transparent; the prospectus and annual reports detail the screening criteria.

The excluded list is not trivial. Alcohol and tobacco, historically two of the largest consumer-staples holdings, are gone. Many defense contractors are excluded. Some major technology and pharmaceutical firms might be included conditionally based on their involvement in abortion-related products or services. The result is a portfolio that looks roughly similar to a broad market index in some respects (still holds Apple, Microsoft, Tesla, large financials) but with significant divergences in others.

Capital allocation and portfolio construction

PTL’s portfolio is constructed through a blend of negative screens (exclusions) and positive weighting. After the screening process removes prohibited companies, the remaining eligible companies are weighted toward the fund’s target allocation. The fund does not attempt market-cap weighting — it applies its own weighting scheme, though the details depend on the specific version of the fund’s methodology.

The fund’s capital comes from investor inflows, which are then deployed into the eligible holdings. When investors buy shares, authorized participants deliver the underlying stocks to create new shares. This mechanism keeps the fund’s price tethered to its net asset value, though market stress or sharp moves in the underlying equity market can create temporary disconnects.

The fund rebalances periodically, adjusting holdings as companies change and as the screens are re-applied. If a company in the portfolio becomes involved in an excluded activity (for instance, by acquiring a company in an excluded sector), the fund may need to divest. Conversely, companies removed from the exclusion list would be re-evaluated for inclusion.

How faith-based screening affects returns and risk

The theoretical question at the heart of values-based investing is whether applying screens improves, impairs, or leaves unchanged the fund’s return characteristics relative to a broad market index. The empirical answer varies by time period and by how much the screening diverges from market weights.

Historically, excluding tobacco and alcohol may have cost performance: these were highly profitable, cash-generative businesses with strong returns for decades. An investor who avoided them would have missed years of outperformance. More recently, the excluded stocks have not meaningfully outperformed the broader market, so the performance drag has been minimal.

Technology exclusions could be meaningful: if Inspire’s screens exclude major tech firms, the fund would have significant underweight to a sector that has dominated equity returns in recent years. The prospectus clarifies which major firms are included and excluded, so this can be assessed directly.

The actual performance gap between PTL and a broad index depends on the specific screens applied, the market environment, and which excluded sectors are outperforming or underperforming at any given time. No guarantee exists that values-aligned portfolios will match or exceed broad-market returns; an investor choosing PTL must be comfortable with the possibility of underperformance if the excluded sectors outperform.

Concentration risk is also relevant. If the excluded companies represent a material portion of total market capitalization, the fund’s diversification may be weaker than a broad index. For instance, if alcohol and tobacco together comprise 5% of the market-cap universe, excluding them reduces the fund’s diversification and forces over-weighting of the remaining 95%.

Costs and competitive positioning

PTL’s expense ratio is competitive with broad-market ETFs, though somewhat higher than the cheapest large-cap index funds. The added cost covers the research and administration required to maintain and apply the values-based screens. This is a trade-off: investors pay a small premium over a pure market-cap-weighted index in exchange for alignment with their values.

The fund’s liquidity depends on investor interest and trading volume. PTL is one of the larger values-based investing ETFs, so shares are reasonably liquid, with tight bid-ask spreads under normal conditions. However, compared to the largest broad-market ETFs (such as the SPDR S&P 500), PTBD may have wider spreads and lower trading volumes.

Risks and limitations of values-aligned investing

The primary risk is that the screening process is based on the fund sponsor’s interpretation of biblical and values-based principles, which is inherently subjective. Two different Christian investors might disagree about which industries warrant exclusion or which constitute “faithful stewardship” of capital. This means the fund’s screening is a particular point of view, not a universal consensus.

There is also the risk that market sentiment shifts, and the excluded categories suddenly become market darlings. If alcohol stocks enter a bull market driven by demographic shifts or other factors, PTL would underperform a broad index. Similarly, if defense or weapons stocks rally sharply due to geopolitical tensions, the fund’s exclusion of these names would be a drag.

Regulatory and definitional risk exists as well. The definition of which companies are “excluded” may shift as Inspire re-interprets its screens or as regulatory guidance changes. For instance, if a company’s involvement in abortion services becomes more or less clear, it might move between the included and excluded lists. This administrative fluidity is necessary but can create tracking error or holding turnover.

Finally, values-based investing has not historically demonstrated superior risk-adjusted returns compared to broad market indexing. An investor choosing PTL is doing so for values alignment, not for the expectation of beating a broad index. Performance should roughly track the broad market, adjusted for the screening drag and tracking error inherent in the process.

Researching and monitoring PTL

Investors should start with the Inspire prospectus and screening criteria, which detail the exact exclusion categories and the positive values factors applied. The SEC filing reveals the fund’s current holdings, weightings, and the expense ratio. Inspire also publishes detailed documentation on which major companies are included and excluded — this is important transparency for an investor trying to understand the portfolio’s composition and potential return drivers.

Monitor the fund’s tracking versus a broad large-cap index (such as the S&P 500 or Russell 1000). Over extended periods, PTL’s performance relative to a broad index reveals whether the values-based screening is a meaningful performance drag. If PTL significantly lags a broad index, that may reflect market outperformance of excluded sectors; if performance is roughly in line, the screens have been neutral to slightly positive.

Keep an eye on which companies have been added to or removed from the holdings due to screening changes. Significant turnover due to screening shifts can incur tax inefficiency and trading costs. A fund that rarely changes its holdings due to screening may have adopted more stable screens, while frequent turnovers may suggest the definitions are evolving.

Finally, consider whether the values-based mandate aligns with your own principles. The fund’s screening reflects Inspire’s interpretation of biblical principles; an investor with different values might find a different values-aligned fund a better fit. The fund should be chosen for values alignment first, with performance as a secondary consideration.