Is there really a suitable benchmark for the Catholic investor?
By Jonathan Capelo Gavela, CFA
Religious congregations, dioceses, and secular institutes face an increasingly common question: what benchmark should we use to determine if our investments are consistent with our mission and charism? We are accustomed to comparing our portfolio’s performance against a benchmark index to evaluate its financial results. However, Catholic investors also need to understand where their assets are invested and have benchmarks that help them assess their alignment with the institution’s values.
Are there indices that can help us make this comparison from a Catholic perspective? In 2016, Bountiful Financial presented in Rome The First Global Study of Catholic Indices, a pioneering study that identified 37 indices related to Catholic investment: 28 equity indices and 9 fixed-income indices. The first conclusion is that there are more benchmarks than we might initially think, but also less homogeneity than it appears. The indices use different exclusions and thresholds and rely on various references, such as the guidelines of the U.S. Conference of Catholic Bishops, the guidelines of the Austrian Bishops’ Conference, the investment policy of the IOR (Institute for Religious Works), or combinations of guidelines and the Social Doctrine of the Church (SDC). Another striking aspect is that none of the publicly examined methodologies explicitly cites Mensuram Bonam, although some incorporate overlapping principles. Published in 2022 by the Pontifical Academy of Social Sciences, this document offers guidance on integrating the SDC into financial decisions. Therefore, simply replicating a Catholic index does not, in itself, guarantee the full application of Mensuram Bonam.
How do we translate all this to our investments? Further research reveals something important: the existence of an index does not mean we can invest directly in it. Of the 37 indices studied by Bountiful, our review identified 6 indices replicated by 7 funds or ETFs. In fixed income, we have not identified any publicly traded products that directly replicate any of the nine indices studied, although there are active Catholic fixed income funds. The universe of Catholic investment is, however, much broader. Morningstar identified 87 Catholic strategies with data from April 2026. Our review confirms that some use conventional financial indices to measure their performance. The United States concentrates a large part of this industry, although in Spain and Europe there are also funds that apply policies inspired by Catholic Social Teaching without replicating Catholic indices.
The increasing number of Catholic indices and products is good news, as it expands our possibilities for comparison and investment, but it does not guarantee the overall consistency of the portfolio. An index is a benchmark for comparison, while a fund is an investment vehicle. Neither replaces the criteria that should guide an institution’s decisions. In fact, a fund can apply Catholic principles using a conventional benchmark, and a religious congregation can manage its assets in accordance with Catholic Social Teaching without investing exclusively in products labeled as Catholic.
Therefore, choosing a suitable index or product is important, but what is truly relevant is choosing a framework to guide decisions about all investments and an internal procedure for applying and monitoring it. Regarding which framework a religious institute should choose, Catholic Social Teaching provides the principles, while documents such as the guidelines of episcopal conferences or Mensuram Bonam offer guidance of a different nature and scope, without intending to replace one another. In our view, Mensuram Bonam is a particularly valuable reference due to its comprehensive vision, although each congregation must translate these principles into its own policy, adapted to its specific circumstances. Within that policy, Catholic indices can serve as complementary benchmarks, especially in equities.
But choosing a framework doesn’t mean putting it into practice. Mensuram Bonam presents active engagement as the first of its three lines of action, along with improvement and exclusion. How can a congregation that invests primarily through funds and doesn’t directly own shares exercise this engagement? While it typically can’t vote at company meetings, it can engage with management companies, either directly or with the support of its external advisors, request explanations about controversial companies, learn about their voting policies, and document the responses and commitments made. This isn’t the same as directly voting, but it does allow for influence and the ability to demand follow-up.
How do we put these principles into practice? Undoubtedly, this is one of the biggest challenges. Although the specific criteria will depend on the framework chosen by each institution, there are best practices that we consider useful regardless of whether Mensuram Bonam or other guidelines are adopted:
• Monitor all investments using consistent criteria. Working with several banks requires consolidating information to have a comprehensive and comparable view of the portfolio. In funds and ETFs, look-through analysis allows you to identify the companies and governments to which the institution is exposed.
• Proceed gradually and realistically. Applying these criteria to an entire portfolio can be complex. It is preferable to start with achievable goals and improve each year rather than designing a methodology so ambitious that it will never be implemented.
• Give specific treatment to fixed income. Investing directly in bonds makes it easier to identify and monitor the issuer. In the case of governments, we can use our own benchmarks, such as a comparative universe of G20 countries, since their evaluation requires different criteria than those used for companies.
• Go beyond exclusions. It is not enough to identify activities incompatible with our policy. We can also evaluate the positive contribution of investments to people, the planet, and prosperity.
• Commit within the capabilities of each institution. Directly, through asset managers, or with the support of external advisors, institutions can request explanations in the event of controversies, learn about the actions taken, and monitor their evolution. The goal is not merely to obtain a rating or score, but rather comparable information to decide what to maintain, what to improve, and when to intervene or divest.
Finally, the crucial step is to integrate indices, products, and criteria into a procedure that can be explained to governing bodies: decide, act, and monitor. This involves establishing policies and benchmarks aligned with the mission, taking action when an investment raises concerns, documenting decisions, and regularly monitoring progress and outstanding issues.
Sharing best practices and worst practices among religious institutions and external advisors could also be a concrete way to move forward together, in the spirit of synodality. Because while management can be delegated, the responsibility for ensuring that assets align with the mission remains with each institution.