On the latest ETF 360, VettaFi’s Cinthia Murphy interviewed Michael Schnackenberg, head of distribution at Eventide. The two discussed faith-based investing and differentiation.
Eventide Wants Investors to Own Value-Aligned Companies
Eventide is a values-based firm that roots its investment practice in biblical beliefs. “There’s an issue in the marketplace that has gone unchecked for quite some time,” Schnackenberg said, “and that’s just around values misallignment.” He explained that a lot of faith-based investors unknowingly invest and profit from products that cause a number of problems that faith attempts to solve. “Investing is ownership, and that’s really core to our philosophy.”
ETF 360 Talks Business 360
“Business 360 is really the framework for how we approach our screening process,” Schnackenberg shared. He described the process as “avoid, embrace, and engage.” For “avoid,” Schnackenberg shared that they look to avoid any product or service that is causing harm. They look for companies to “embrace” by determining how those companies fit in their communities. “We often say we want to take a ‘love your neighbor’ approach to investing.” These communities include employees, customers, and supply chain neighbors. “Engage,” meanwhile, refers to companies that Eventide feels it can make better. “We think that business 360 offers a really differentiated product,” he said. “Typically it leads us to offer strategies that are wholly different from the ongoing benchmarks.”
Murphy asked for clarity around what is meant by “harm.” She brought up examples like environmental harm, weapons, etc. “There’s [ethical] discernment in this process,” Schnackenberg said, continuing, “It is anything that is not contributing to human flourishing.” He cited weapons, abortion services, and addictive products. He also said gambling, violent video games, and social media were considered harmful by Eventide. “We’re unyielding with anything we believe is misaligned with our view of human flourishing.”
Systematic ETFs Sit Between Passive and Active Investments
The nature of their values-orientated investing and systemic approach means that Eventide sits somewhere between passive and active investing, as many companies are screened out. “What we’re hoping to create here is an ethical win-win.”
Murphy noted that their suite of ETFs has a range of different funds, from international to small-cap to core. Asking if the implementation was purely useful for faith-driven investors, Schnackenberg said it was broader. “Our view is that this is just a wise approach to investing,” he said. Accordingly, he said Eventide wants to be a growth partner for their clients.
As an example, he noted that, of the Magnificent Seven, their products screened out every company save for Nvidia.
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