The Vatican Bank has announced this Tuesday the launch of two equity indices, both in the US and in the eurozone, selecting stocks from firms that purportedly respect and adhere to Catholic tenets.
The initiative was set up in partnership with Morningstar and represents an abnormal association between the Vatican and the financial sector.
The Vatican Bank is officially known as the Institute for the Works of Religion (IOR) and these new indices are labelled as the Morningstar IOR US Catholic Principles and the Morningstar IOR Eurozone Catholic Principles.
Each of these indices holds 50 medium and large-cap companies, including Big Tech and major financial firms, that the Vatican Bank argues are "consistent with Catholic teachings on life issues, social responsibility and environmental protection".
According to Morningstar, the fund's top American holdings feature companies like Meta and Amazon, while its European counterpart includes firms such as ASML, Deutsche Telekom and SAP.
This partnership between the Vatican Bank and Morningstar comes after initiatives to rehabilitate the IOR's image, which had been damaged over the years through various scandals involving fraudulent activities such as misappropriation of funds.
The late Pope Francis had already ratified a series of reforms to address those problems.
ESG outflows and Catholic-based investing
This move by the Vatican Bank also occurs during a period when ESG funds are experiencing substantial outflows.
However, the concept of Catholic-based investing is not new or unique. These new indices already face rivals in the sector.
For example, there is a US-based ETF named S&P 500 Catholic Values Index structured in a similar way and worth over $1bn (€840mn).
Additionally, a US-based family fund named Ave Maria Mutual Funds reported over $3.8bn (€3.2bn) in assets under management last year. This fund also claims to follow a Catholic-based investment strategy.
