• S&P 500: +6.15%
• Nasdaq: +9.04%
• Stoxx Europe: +4.02%
• All Country World Index EUR: +5.98% (the dollar rose by 0.16%, so in dollars the increase was 5.82%).
• Global Fixed Income Index EUR: -0.22% (the dollar fell by 0.16%, so in dollars the change was -0.38%).

It appears that the market is somewhat calmer regarding the tariffs announced by Trump, who has temporarily suspended these increases while awaiting agreements in the upcoming negotiations with various countries. However, there is a tense calm due to movements in the fixed income market that generate concern.

What is happening in fixed income? Inflation is decreasing slowly, credit is cooling down, and government debt continues to rise. All of this affects the market, but the drop hasn’t been very pronounced. So, why worry?

This image shows the yield curve, a graphical representation of the different maturities of U.S. Treasury bonds (it could be any type of bond, but we focus on U.S. Treasuries because they are the global benchmark) with the corresponding interest rates for each maturity.

Source: Bloomberg

These rates are set by the market through supply and demand. The U.S. Central Bank (FED) only determines the “overnight” interest rate (the rate at which banks lend to each other day by day). As can be seen, the one-year interest rate is at 4.04%, the two-year at 3.875%, the five-year at 3.927%, and so on.

Why do the interest rates on this curve move? If investors heavily demand 10-year bonds because they find the offered yield attractive, the bond price rises, but the interest rate falls. Why? Bonds are usually issued at a price of 100, and the rate is set in advance based on market conditions. Suppose a 5% rate is set, so the bondholder receives a €5 coupon annually or at the agreed frequency. Bonds are traded in a market with buyers and sellers. If the bond starts being in high demand because the interest rate is attractive, its price begins to rise—let’s say to €105—yet the coupon remains the same at €5. So, what is the new yield for a bond bought at €105? It would be 5€/105 = 4.76%. When investors find a bond attractive and buy it in large quantities, the price goes up but its yield goes down.

That said, what is worrying investors is the rise in long-term rates. In the next graph, you can see the evolution of the yield curve from April 2 (black line) to June 5 (blue line).

Source: Bloomberg.

In the ovals, I highlight the rise in rates at the 10-year and 20-year maturities in just one month.

• 10-year increased from 4.13% to 4.35% (+22 basis points).
• 20-year increased from 4.53% to 4.86% (+33 basis points).

What is driving this increase? Long-term rates (from 7 years onward) can rise due to the following three fundamental reasons[1]:

• Economic improvement. Companies seek more debt to invest in more projects as a result of this perceived improvement. This increases demand for bonds and thus interest rates. Moreover, bonds are sold to buy riskier assets such as equities. And what happens to interest rates in this scenario? They rise. Higher returns are demanded from financial assets. This could be seen as a positive scenario.

Is there really an economic improvement? In this graph showing GDP (Gross Domestic Product) evolution, a downward trend is evident.

Source: Bloomberg

And in this graph, which represents expected new orders in manufacturing and service sectors, there is also a downward trend, suggesting these sectors are not experiencing significant improvement.

Source: Bloomberg

Looking at these two examples, it is reasonable to conclude that the rise in long-term interest rates is not due to a broad economic improvement.

• Higher expected inflation. If you expect inflation to be 5%, you wouldn’t buy bonds yielding 5% because you’d lose all your purchasing power. Instead, you’d sell those bonds (what happens to interest rates then?) and buy other assets that protect against inflation.

This graph shows 10-year inflation expectations. Currently, inflation is expected to be 2.31%, and it currently sits at 2.30%. This suggests no inflation increases are foreseen in the long term.

• Issues with national accounts. If investors suspect that a country’s finances are deteriorating, they prefer to stop or reduce investment amounts. The U.S. deficit continues to grow, and debt-to-GDP is at 120%. The U.S. pays around $1T annually in interest, more than its defense spending. Moody’s downgraded the debt rating, and the CDS (default insurance) peaked at 56 points in May, compared to 33 in February.

It makes sense that the rise in long-term rates is due to a loss of confidence in the U.S. economy and its currency, caused by excessive spending far beyond its revenue.

Although the increases in 10- and 20-year rates may seem small, they have significant implications in the financial world, especially since they are causing investor concern.

Investors are selling U.S. Treasury bonds and are not showing up at auctions as before. On May 21, there was a $20Bn Treasury bond auction with unusually weak demand. As a result, 20-year rates rose sharply, surpassing 5%. This coincided with a 1.6% drop in the S&P 500, a -0.50% fall in the dollar, and a 1% rise in gold.

The Trump administration had promised to cut unnecessary spending while also lowering taxes. During the campaign, these promises were expected to generate $2 trillion in savings. However, by January 30, 2025, this had been reduced to $1 trillion and finally to $155 billion. The forecasted deficit for 2025 is $7 trillion, or 6.2% of GDP. By the way, the disagreement between Elon Musk and Trump stems precisely from this issue.

How will they finance this growing deficit?

• Taxes? Trump wants to cut them.
• Print more money? A measure that could generate inflation.
• More debt? They could issue more debt, but we’ve seen that in one of the auctions, they had to increase yields to attract demand. It’s a vicious cycle: more debt is issued, investors demand more yield, which raises costs, and so on.

I believe the bond market is signaling a warning, as this is not only happening in the U.S., but globally, as shown in this image.

Source: FMI, Incrementum

This chart shows the deficit (the more negative the number, the larger the deficit) to GDP ratio in each of these countries, with the trend rising everywhere except Italy, where the “Superbonus” has been eliminated. The deficit rose sharply in 2020 due to COVID, when spending increased to help households. Although this spending was claimed to be temporary, it now seems it could return to those levels.

What are the implications?

1. Higher yields required for financial assets: As I’ve mentioned before, the U.S. 10-year interest rate is a benchmark for riskier investments. We saw earlier that the U.S. 10-year rate is currently at 4.35%, so any other investment in dollars should offer a higher return. How much higher? That depends on the perceived risk. Investing in a very defensive company is not the same as investing in a risky one; the former will require a smaller spread, but always above 4.35%.

If I demand higher returns from financial assets, my entry price must be lower than previously estimated in order to increase that return. So far, rate increases aren’t very steep, but they must be monitored closely.

• Rising government debt: If governments keep increasing debt and offer higher yields to make it attractive (higher interest rates), it could crowd out private corporate debt. Why? Because if market interest rates rise, companies will have less capacity to finance themselves at low rates, which can be problematic.

• Currency destruction due to excessive deficit: An excessive deficit devalues the currency, as investors lose confidence in the country, creating inflationary pressures. Central banks around the world are reducing U.S. bond purchases and stockpiling gold. As evidence, the dollar has fallen 10.4% so far this year.

So should we sell everything due to the perceived risk? Absolutely not. We must discern where to invest. The conclusions I draw from the three points above for the world of investing are:

• Demand higher returns from assets.
• Avoid highly indebted companies.
• Seek assets that protect against potential inflation increases.

Therefore, in my humble opinion, investment should target companies with high Return on Capital Employed (ROCE), meaning companies with high, sustainable, and growing returns over time and low debt. Inflation is best fought by investing in real assets—and companies are real assets—and if there is cash, it should be converted into gold to preserve purchasing power.

[1] Why has the cost of US public debt skyrocketed? – Podcast by Juan Ramón Rallo | Podcast on Spotify. Min 0,55.

• S&P 500: -5,75%
• Nasdaq: -7,69%
• Stoxx Europe: -4,18%
• All Country World Index EUR: -7,45% (the dollar fell 4.25%, thus in dollars, the decline was -3.20%) 
• Índice renta fija global EUR: -3,13% (the dollar fell 4.25%, thus in dollars, it rose by 1.12%) 

What caused this disaster? Before diving into details—and many of you already know—how can we determine if a market is expensive or cheap? With other assets, like real estate, we have benchmarks such as price per square meter, and this benchmark will vary based on qualitative factors like location, neighbors, noise, etc. That’s why some apartments are pricier than others with the same square footage. Financial assets operate similarly; we look for benchmarks to help us understand whether a financial asset (stock, bond, etc.) is expensive or cheap.

It’s not just about the number—we’re assuming certain things behind that number. Although financial jargon can make things seem overly complicated, this is really common sense. Let me clarify:

The most commonly used benchmark for valuing companies is the P/E ratio (not my favorite, but helpful).

P/E = Price/Earnings

This ratio indicates how many times a company’s earnings investors are willing to pay. For example, if a company’s P/E is 10, you are paying 10 times its earnings, meaning you must wait 10 years (at annual earnings) to recover your investment. Great, but is 10 expensive or cheap? As a good Galician would say, “It depends.” There is no magic number, as mentioned earlier regarding real estate; it depends on the sector, company quality, risk, etc.

Perhaps it is clearer if we rearrange the formula:

Price = Earnings × P/E

Earnings are factual¹, but the P/E (the multiple) is subjective. Depending on the multiple I assign, I determine the asset price. If I consider a company high-quality, I assign a higher multiple; if I perceive greater risk, I assign a lower one. Hence, no magic number exists.

This leads me to what happened in the market. These declines were not driven by falling earnings but rather by a shrinking multiple—a reduction in the P/E ratio. Investors perceive greater risk and thus want to pay a lower multiple due to increased market uncertainty. Remember, the S&P 500 was trading at historically high multiples, boosted by optimism around artificial intelligence, economic improvement, and improving corporate margins. Now, this optimism has been overshadowed. Why? Trump.

Firstly, there is heightened geopolitical tension due to ongoing conflicts, but investors’ main concern has been the announcement of “Liberation Day,” set for April 2, when the definitive tariff policy would be revealed. The higher the uncertainty, the less investors want to pay a high market multiple; instead, they prefer selling and buying more defensive assets, such as gold, which rose 9.26%.

In this chart, you can observe the sharp rise in the political uncertainty index created by Economic Policy Uncertainty².

Source: Economic Policy Uncertainty Index

Trump’s announced tariffs intend to boost U.S. production, creating jobs and revitalizing American industry. Additionally, revenues from these tariffs might allow for tax cuts. It sounds good, but…

1. Tariffs will likely reduce imports, and it’s uncertain whether remaining import revenues will sufficiently fund the desired tax cuts.
2. Foreign companies will export less, resulting in reduced sales, and American private sectors will suffer from higher prices.

Given this scenario, it’s logical for investors to become more cautious. Notably, American stocks suffered the greatest declines, especially the “magnificent seven” (Microsoft, Amazon, Alphabet, Meta, Nvidia, Apple, and Tesla), as illustrated in this chart.

Source: Bloomberg

Besides affecting U.S. markets significantly, the hardest-hit companies were those trading at higher multiples. Investors tend to sell first what has risen most and thus has the potential to be more volatile. Regions targeted by tariffs initially did not suffer as severely. Emerging markets rose 0.378%, and small-to-medium European companies fell only 2.9%—by the way, companies within Altum’s investment universe.

“Liberation Day” arrived, loudly announced by Donald Trump’s administration. In his speech, he talked about reciprocal tariffs and making America a richer, better country again. Here’s a summary of some tariffs:

• Universal tariff: 10%.
• Aranceles adicionales:
  • China: 34%, totaling 54%.European Union: 20%.Japan: 24%.
  • Vietnam: 46%.
• 25% tariff on automobiles and components.

I believe this is a mistake and will negatively impact international trade. Affected countries have already started to announce possible retaliations. Tariffs are protectionism, and protectionism is harmful to the economy. In the 1930s, the U.S. Smoot-Hawley Tariff Act had devastating national and international economic consequences. For instance, American imports fell by 40% and exports by 60% between 1930 and 1932³. Today’s situation is different due to the Great Depression context, but measures meant to stimulate recovery ultimately worsened the crisis.

But let’s verify if these tariffs are truly reciprocal, as Trump claims. This image shows tariffs, including non-tariff barriers imposed by other countries:

Source: BofA Research

What non-tariff barriers is Trump complaining about? In Europe, among others, these include:

• Sanitary and phytosanitary standards.
• Technical and quality standards (labeling, emissions, etc.).
• Environmental and climate regulations.
• Subsidies and unequal access to public contracts.
• Import quotas limiting American products.

Trump claims these barriers obstruct trade with the EU, being even more harmful than tariffs—a point Mario Draghi also highlighted in his latest report⁴. A theoretical tariff calculation, considering these aspects, would be:

Theoretical tariff = U.S. trade deficit with the country/U.S. imports from that country

Applying this formula to the EU yields a 39% tariff. Hence, Trump argues they’re effectively charging half that rate, implying they should be satisfied. However, this argument seems weak, suggesting fair trade wouldn’t involve trade deficits—a historically inaccurate notion since trade deficits have always existed. Indeed, global trade has significantly reduced poverty worldwide.

What raises doubt is the exaggerated theatricality of the tariff announcement, leading me to suspect—as I’ve read elsewhere—that the U.S. truly aims for trade negotiations⁵ from a position of power or perhaps aims to weaken the dollar to reduce the trade deficit.

All this maneuvering has made markets extremely nervous, widening the range of potential outcomes—in other words, increasing uncertainty and thus reducing the multiple (P/E) to reflect this scenario.

What should we do? Immediate consequences are:

• The steepest declines came from companies trading at demanding multiples. For example, Nvidia has dropped 32% from its January peak.     
• Companies selling products with narrow margins may face serious challenges due to increased costs or even stop producing if they lack pricing power. Low-margin companies typically lack such pricing power.  

This environment offers attractive opportunities because when markets panic, investors sell indiscriminately, creating excellent opportunities in companies with high margins, low debt, and stable growth—precisely the companies we seek at Altum.

[1] Taking into account the profit already published. There is the estimated P/E which is calculated with the estimated profit..

[2] Tool developed by Scott R. Baker, Nicholas Bloom and Steven J. Davis. This index is constructed based on news analysis, tax law changes and dispersion among economic forecasts. 

[3] Qué son los aranceles Smoot-Hawley, que profundizaron la Gran Depresión de 1929 y desataron la última gran guerra comercial de EE.UU. – BBC News Mundo

[4] 97e481fd-2dc3-412d-be4c-f152a8232961_en

[5] Trump se abre a negociar los aranceles si le ofrecen “algo fenomenal” a cambio

Tinder and abortion

Tinder, and its parent company Match Group, have been promoting abortion for years, especially since the overturning of Roe vs Wade, by the US Supreme Court in 2022, which limited the legality of abortion in some states. It does so through different initiatives such as covering the travel expenses of its employees to have an abortion in a state where it is legal or through the signing of Don’t Ban Equality Statement, where more than a thousand companies have publicly positioned themselves in defense of abortion with advertising campaigns and justifying the economic impact of outlawing abortion.

However, at New York Fashion Week, Tinder has spoken out more clearly than ever, through a collaboration with the clothing brand AREA, launching a T-shirt called “Bans off our bodies” denouncing the illegality of abortion. To do so, it has also donated $25,000 to Planned Parenthood in honor of the campaign.

Right after the fashion show, its Marketing Director spoke about the campaign in an interview for TeenVogue, explaining how the illegality of abortion directly affects the company’s business.

Tinder, conducted a study with the Kinsey Institute at Indiana University, and found that 87% of single people said that their attitude and dating behavior had changed after the abortion decision was overturned, directly impacting the activity and interaction of users of the social dating network. For example, following the repeal of Roe v. Wade, 15% of users under the age of 50 on the platform are afraid of post-relationship pregnancy, 11% suffer from nervousness or anxiety during the act, or that 14% of users highlight having fewer sporadic relationships than before the repeal.

We see, therefore, that Tinder’s support for abortion is not merely an ideological issue, but primarily there is a purely economic interest since the protection of the unborn, translates directly into less use of their dating app. 

How should Catholic investors react to this?

As Catholic investors, it is essential that we align our financial decisions with the values of our faith. In a world where corporations increasingly influence cultural and ethical norms, we must ensure that our investments do not inadvertently support initiatives that conflict with Catholic teachings. For example, if a company actively promotes practices contrary to the sanctity of life or human dignity, it is our responsibility to reconsider our involvement with them. Financial returns are important, but for faith-driven investors, these cannot come at the cost of compromising core beliefs.

This ethical approach requires that we go beyond merely analyzing a company’s financial performance. We must dig deeper to understand its policies, corporate culture, and the social impact of its practices. Does the company engage in activities that contribute positively to society? Does it uphold values that align with respect for life, the common good, and stewardship of creation? These are questions Catholic investors must consider, not just as stewards of wealth but as guardians of moral integrity.

In making these considerations, it becomes clear that Catholic investors have a unique role in the marketplace. We are called to witness our values, ensuring that our financial resources are used for the betterment of society and in service of human dignity. This perspective might involve avoiding companies that, for instance, support abortion, exploit labor, or disregard environmental responsibilities.

For those seeking guidance, in Altum Faithful Investing we give the the investment guidelines so your activities does not interfere with you core principles. Faithful Investing goal is not just to follow the Catholic Church investing guidelines, but also financial reward and optimization.

Altum Faithful Investing

In today’s investment landscape, there is a growing demand for strategies that not only deliver financial returns but also align with the moral teachings of the Catholic Church. Faith based investing, particularly Catholic responsible investments, goes beyond profit; it’s about integrating faith into every financial decision. At Altum Faithful Investing, we advise our clients on the management of their Catholic investment portfolios with professionalism, always seeking two objectives: to obtain an adequate return and to ensure that the investment portfolio complies at all times with the Magisterium of the Catholic Church.

The Core of Faith Based investing

Catholic responsible investing is rooted in the belief that our financial choices reflect our values. As Catholic investment advisors, we aim to help our clients build profitable and morally aligned portfolios. Our approach to Catholic responsible investment funds is guided by the principles of Catholic social teaching, which emphasize the dignity of the human person, the importance of family, the sanctity of life, and the stewardship of creation.

Promotion of Human Dignity

Every person has inherent dignity that must be respected. Our Catholic stock screener: Altum Explorer, focuses on identifying companies that respect human rights, oppose pornography, and promote freedom from addictions. We avoid investing in companies involved in activities that compromise human dignity, such as those that profit from pornography or violate religious freedom.

Support for the Family

The family is the cornerstone of society, forming the foundational unit where values, faith, and love are nurtured. Pope Francis has repeatedly emphasized the importance of protecting and promoting the family, recognizing its essential role in fostering community and human connection. With this in mind, our investment strategy is rooted in upholding the Catholic understanding of marriage and family life. We carefully select investments that align with these values, supporting organizations and initiatives that strengthen family bonds, advocate for family rights, and provide resources for family stability. By doing so, we contribute to a society where families are empowered to thrive and children can grow in supportive, loving environments.

Protection of Human Life

As Catholic investors, we are deeply committed to upholding the sanctity of life from conception to natural death. This commitment drives our faith-based investment strategy, which consciously avoids companies and sectors involved in abortion, euthanasia, and the production of indiscriminate weapons that threaten innocent lives. Instead, we seek investments that foster a culture of life, prioritizing businesses and initiatives that promote human dignity, healthcare, and ethical medical research. Our investments reflect our belief that every life is sacred and deserving of protection, and we work to ensure that our portfolio contributes to a world where life is valued, defended, and supported at every stage.

Stewardship of Creation

Caring for our environment is a moral obligation, and we are called to be stewards of God’s creation. Inspired by the Catholic commitment to environmental ethics, our Catholic investment funds prioritize companies that practice responsible environmental stewardship. We actively avoid investments in companies that contribute to significant ecological harm, pollution, or the depletion of natural resources. Instead, we seek out businesses that promote sustainability, renewable energy, and eco-friendly practices (ESG). By doing so, we aim to protect and preserve the natural world, ensuring that future generations can inherit a healthy planet that reflects the beauty and diversity of God’s creation.

A Purposeful Investment Strategy

Altum Explorer, our Catholic investing tool helps identify opportunities that align with our clients’ faith and values. Whether through Catholic mutual funds or direct investments, we provide options that resonate with the teachings of the Church.

Altum Faithful Investing‘s methodology is rigorous. We engage in active dialogue with companies, ensuring that our investments promote human dignity, family values, human life, and environmental stewardship. Over the past three years, we have engaged with over 700 companies to assess their stance on these critical issues.

By aligning investments with Catholic values, we help our clients achieve a balance between financial returns and ethical integrity. This approach to investing for Catholics ensures that their portfolios are not only profitable but also a reflection of their faith.

At Altum Faithful Investing, we are more than just Catholic investment advisors; we are partners in purposeful investing. We believe that every investment is an opportunity to evangelize, to witness to the world that it is possible to achieve financial success without compromising our Catholic principles. We are committed to helping our clients navigate this path, offering expert guidance and a deep commitment to the values that define our faith.

Faithful Living, Faithful Investing.

Catholic Responsible Investing today

In today’s dynamic financial landscape, where investments are not just about profits but also about principles, the concept of responsible investing has garnered significant attention. Among the various approaches, Catholic Responsible Investing (CRI) stands out as a beacon of ethical wealth management, guided by the principles of the Catholic Church.

Catholic Responsible Investing is not merely a financial strategy; it’s a reflection of values deeply rooted in the teachings of the Church. It goes beyond traditional Socially Responsible Investing (SRI) by adhering to specific guidelines set forth by the Church, ensuring that investments align with moral and ethical principles.

At the heart of Catholic Responsible Investing lies the Catholic Investing Guidelines, which provide a framework for conscientious financial stewardship. These guidelines encompass a range of criteria, including respect for human dignity, respect for human life, or promotion of the Creation.

Furthermore, Catholic Responsible Investing embodies the principle of stewardship, recognizing that wealth is a gift to be used wisely for the betterment of society. This ethos extends to the selection of investments, where Catholic investors seek companies that do not conflict with Catholic Social Teaching. Investment portfolios support the culture of life, free of abortion, contraception, indiscriminate weapons, or euthanasia, promote a real co-responsibility with the environment, aimed at preserving the environment for the integral development of future generations, support family, and preserve the dignity of people by promoting human freedom from addictions or respecting religious freedom.

In recent years, the demand for Catholic investment opportunities has grown significantly, leading to the emergence of specialized products such as Catholic investment funds and ETFs. These vehicles enable investors to align their financial objectives with their religious values, offering a compelling alternative to mainstream investment options.

Catholic investment funds and ETFs provide investors with the confidence that their money is working in ways that honor their faith. By selecting these investment options, Catholic investors can be assured that their portfolios are free from companies whose practices contradict Catholic teachings. For example, these funds typically avoid sectors or corporations associated with morally contentious issues, such as those that profit from activities related to abortion or exploitative labor practices. This type of investing empowers individuals to support businesses that actively contribute to social good, fostering a positive impact in communities around the world.

Moreover, Catholic Responsible Investing transcends religious boundaries, appealing to individuals of various faith backgrounds who share common ethical values. While rooted in Catholic teachings, its principles resonate with Christians and people of goodwill worldwide, fostering collaboration and solidarity in pursuit of a more just and sustainable economy.

This inclusivity reflects a universal call to uphold ethical standards and protect human dignity. In an increasingly interconnected world, the values embodied in Catholic Responsible Investing resonate with people across different faiths, making it a model for broader responsible investing practices. By building partnerships and alliances, Catholic investors can encourage greater ethical accountability in global markets, sparking a shift towards corporate responsibility that transcends cultural and religious divisions. Such collaborative efforts can contribute significantly to creating a more ethical and sustainable economy on a global scale.

In conclusion, Catholic Responsible Investing represents a holistic approach to wealth management, integrating financial objectives with moral imperatives. By embracing the principles of the Catholic Church, investors can contribute to the common good while pursuing their financial goals. As we navigate the complexities of the modern financial world, let us heed the call to ethical stewardship and strive for a more just and sustainable future through Catholic Responsible Investing.

Screening Criteria of Faith Based Investing:

Screening criteria form the foundation of faith based investing strategies, guiding the selection of investments that align with specific religious or ethical values. These criteria typically include environmental, social, and governance (ESG) factors, alongside religious principles such as adherence to ethical business practices, respect for human rights, and environmental stewardship. For instance, a Christian-based investment approach may emphasize values such as supporting the culture of life, free of abortion, contraception, indiscriminate weapons or euthanasia.

Positive and Negative Screens:

Positive screens involve actively seeking out investments that contribute to positive social or environmental outcomes in line with religious or ethical beliefs. This may involve investing in companies that prioritize sustainability initiatives, community development projects, or ethical labor practices. Negative screens, on the other hand, involve excluding investments that conflict with religious or ethical values. Common exclusions may include companies involved in the practice of embryonic stem cell research and the manufacture of contraceptives, or those with poor records on human rights or environmental sustainability. Negative screening aims to ensure that investment portfolios remain aligned with the moral compass of investors, avoiding complicity in activities deemed morally objectionable.

Engagement and Advocacy:

Engagement and advocacy strategies are integral components of faith based investing, allowing investors to influence corporate behavior and promote positive change. Engagement involves actively communicating with companies in which investors hold shares, advocating for improved moral practices, transparency, and ethical conduct. This may include dialogue with corporate management, filing shareholder resolutions, or participating in proxy voting to advance specific social or environmental objectives. By engaging directly with companies, faith based investors seek to foster dialogue and collaboration towards responsible business practices.

In addition to influencing individual companies, faith-based investors also collaborate with other investors and organizations to amplify their impact. By joining forces with like-minded groups, they increase the reach and strength of their advocacy, tackling systemic issues in the business world. This collaboration often leads to coordinated efforts on social and environmental issues, enabling faith-based investors to address challenges that extend beyond any single company. Whether it’s advocating for climate action, fair labor practices, or corporate transparency, collective action enhances the effectiveness of engagement and strengthens the moral voice within the investment community.

Moreover, faith-based investing provides a sense of purpose and alignment for investors who wish to incorporate their values into all aspects of their lives. This approach transforms investing from a mere financial transaction into a means of fulfilling a higher calling, where financial growth is intertwined with ethical responsibility. For many, faith-based investing is not just about avoiding harm but actively promoting good, creating a ripple effect in the financial markets that upholds values such as justice, compassion, and integrity. This approach enables investors to see their financial choices as an extension of their personal beliefs, fostering a sense of harmony between their financial and spiritual goals.

Catholic Investing:

Catholic investing seeks to align financial decisions with the principles and values of the Catholic faith. This approach includes selecting catholic mutual funds and other types of catholic investment funds that adhere to ethical and moral criteria established by the Church. Catholic investment firms play a crucial role in guiding investors toward opportunities that are not only financially sound but also ethically responsible. Altum Faithful Investing relies on the Altum Investment Guidelines, which are grounded in the Social Doctrine of the Church, ensuring that the investments made are consistent with Catholic values and teachings. Altum helps Christian investors invest coherently, following faith based criteria.

In conclusion, faith based investing encompasses a range of methods and approaches aimed at aligning financial objectives with religious or ethical values. Through screening criteria, positive and negative screens, and engagement and advocacy strategies, investors seek to create portfolios that reflect their commitment to social responsibility, environmental stewardship, and ethical conduct. By integrating faith based principles into investment decisions, investors not only pursue financial returns but also strive to make a positive impact on society and the world at large.

Alignment of Investments with Values:

At the heart of faith based investing lies the fundamental principle of aligning investments with values. For adherents of various faith traditions, ethical considerations extend beyond personal conduct to encompass the entirety of their interactions, including financial endeavors. Whether rooted in Christian, Islamic, Jewish, or other spiritual teachings, these values often center on principles of social responsibility, environmental stewardship, and ethical governance. As such, faith based investors actively seek out opportunities that not only yield financial returns but also uphold their moral convictions. This alignment serves as a guiding compass, steering investment decisions away from industries or practices deemed incompatible with their faith. In the realm of Catholic investing, for example, this might involve avoiding investments in sectors that conflict with Catholic teachings while promoting those that align with Catholic responsible investments.

Impact on Decision-Making:

The impact of faith based investing extends beyond mere financial gain; it influences the very fabric of decision-making processes. By incorporating ethical considerations into investment strategies, individuals and organizations are compelled to engage in deeper reflection and due diligence. Rather than solely focusing on short-term profits, they evaluate potential investments through a lens that considers their broader societal and environmental implications. This heightened sense of responsibility fosters a more holistic approach to investing, where the pursuit of profit is balanced with considerations of social welfare and environmental sustainability, relying on ESG criteria Consequently, faith based investors become catalysts for positive change, leveraging their financial resources to support endeavors aligned with their values.

Furthermore, this approach cultivates a long-term perspective in investors, encouraging them to look beyond immediate returns and assess the lasting impact of their investments on society. Faith-based investors often seek to support companies that prioritize sustainable practices, fair labor standards, and ethical governance structures, fostering a corporate environment where ethical responsibility is as important as financial performance. This forward-thinking perspective not only enhances the resilience and sustainability of their portfolios but also promotes a culture of integrity and accountability within the broader financial system. As a result, faith-based investing transforms the investment landscape, championing a model where financial decisions are deeply interwoven with moral values and social consciousness.

Integration of Faith Based Investing and Finances:

Integral to faith based investing is the seamless integration of faith and finances, forging a symbiotic relationship between spirituality and economic pursuits. For many practitioners, faith permeates every aspect of their lives, including their financial endeavors. By integrating faith into investment decisions, individuals affirm their commitment to living out their beliefs in all facets of life. This integration serves as a testament to the interconnectedness of faith and worldly pursuits, rejecting the idea of a divide between spirituality and material prosperity. Instead, faith based investing becomes a tangible expression of one’s religious convictions, channeling financial resources towards endeavors that promote the common good and advance the principles espoused by their faith tradition. Catholic investment funds, including Catholic mutual funds and Catholic responsible investment funds, exemplify this integration by providing investment vehicles that align with Catholic values.

In essence, the motivation Faithful Investing transcends the pursuit of financial gain; it is rooted in a deeper desire to live out one’s values and beliefs through tangible actions. By aligning investments with values, individuals and organizations reaffirm their commitment to ethical stewardship and responsible citizenship. This alignment not only shapes decision-making processes but also fosters a holistic integration of faith and finances, where spirituality becomes inextricably linked with economic pursuits. In a world often driven by profit margins and economic incentives, faith based investing offers a compelling alternative—a path guided by principles of integrity, compassion, and social justice. In this regard, it serves not only as a financial strategy but also as evidence of the profound influence faith can have on shaping our world.

XVII Century: Birth of Capitalism

In the 17^th century, the dawn of capitalism ushered in a new era of economic principles, shifting from mercantilism to business-oriented economics. It was during this period that publicly traded companies surfaced in Great Britain and the Netherlands, laying the groundwork for modern financial markets.

XVIII Century: John Wesley’s Influence

In 1759, John Wesley, the founder of the Methodist movement, delivered his 50th sermon titled “The Use of Money.” This sermon marked the initiation of Methodist scrutiny over investments, particularly in industries such as alcohol, tobacco, and gambling. Wesley’s teachings sowed the seeds for ethical considerations within investment practices among Methodists.

XIX Century: Quaker Abolitionism

The 19th century witnessed the rise of Quaker abolitionism, epitomized by the “free produce” movement. Quakers advocated for boycotting goods produced by slave labor in Britain and the U.S., aligning their economic actions with their moral stance against slavery.

XX Century: Socially Responsible Investing

The 20th century saw significant strides in socially responsible investing. In 1960, the Mit-Ghamr Islamic Saving Associations mobilized Muslim investors, offering investment opportunities compliant with Shari’ah law. Later, in 1971, the Episcopal Church’s shareholder resolution against General Motors in apartheid South Africa catalyzed the Interfaith Center for Corporate Responsibility, spearheading socially responsible investing movements. Additionally, the creation of the Pax World Fund in 1971 marked the advent of publicly available mutual funds integrating social and environmental criteria.

By 1995, the Social Investment Forum Foundation unveiled the first sustainable investment inventory in the U.S., reflecting a growing awareness of ethical considerations in investment decisions.

XXI Century: Evolution of ESG Guidelines

The 21st century witnessed the evolution of Environmental, Social, and Governance (ESG) guidelines, though not inherently faith-consistent. Initiatives such as the United Nations Global Compact, Principles for Responsible Investment, and the establishment of Sustainable Development Goals underscored the increasing importance of ethical and sustainable investment practices.

Shari’ah Investing and Interfaith Environmental Approach

Shari’ah-compliant investing, concentrated in regions like Iran, Malaysia, and the Gulf Cooperation Council, has seen substantial growth, exemplified by funds like Amana Growth. Additionally, interfaith initiatives like the Alliance of Religions and Conservation and the Zug Guidelines have promoted collaborative environmental stewardship across diverse religious traditions.

Christian, Jewish, and Catholic Faith Based Investing

Christian-values funds, primarily in the U.S., manage significant assets and actively engage in ESG advocacy. Similarly, Jewish-values investing gained prominence with the publication of the “Greenbook” in 2021, guiding investors in aligning investments with Jewish values.

Catholic faith based values, rooted in the Compendium of the Social Doctrine of the Church, emphasizes socially responsible stewardship. Initiatives like the Catholic Impact Investing Pledge and Altum Faithful Investing demonstrate a commitment to integrating impact investment with Catholic Social Teachings.

Faith-based investing, woven into the fabric of religious teachings and ethical convictions, continues to evolve amidst the complexities of modern finance. From its historical origins to contemporary practices, faith-based investors strive to harmonize financial goals with moral imperatives, embodying the timeless principle of investing with purpose and conscience.

Concept of Faith Based Investing

Faith based investing is rooted in the belief that financial decisions should reflect one’s values and principles. It is a conscious effort to invest in companies or projects that contribute positively to society while avoiding those that conflict with moral or ethical standards. This approach considers not only the financial aspects of investments but also their social and environmental impact.

Although non-financial factors such as environmental, social, and governance (ESG) sustainability have become an important part of investor analysis, this approach alone is insufficient for many investors, as it does not incorporate other important concerns and beliefs. Faith based investing goes further by integrating religious principles into investment strategies. Investors who subscribe to this approach typically screen potential investments based on criteria that reflect their values. One of the primary objectives is to promote social responsibility and ethical behavior within the corporate world.

For example, a Christian investor might choose to avoid investing in companies involved in activities such as abortion, pornography, or weapons manufacturing, as these industries may conflict with Christian teachings. Similarly, an Islamic investor may adhere to Shariah principles, which prohibit involvement in businesses related to alcohol, pork, gambling, or interest-based financing.

In addition to avoiding certain industries or practices, faith based investors may actively seek out opportunities that align with their values. This could involve investing in companies that demonstrate a commitment to environmental sustainability, promote social justice, or support community development initiatives.

The concept of faith based investing is not limited to individual investors; institutional investors, including religious organizations, endowments, and foundations, also incorporate ethical considerations into their investment strategies. These entities often use their financial influence to advocate for positive change and hold companies accountable for their actions.

In this way, faith-based institutional investors wield considerable power to influence the market, promoting a vision of the economy where profits and principles coexist. Their large-scale investments not only signal a commitment to ethical standards but also inspire a shift in broader investor behavior, encouraging other stakeholders to consider the social and environmental impact of their financial decisions.

However, faith-based investing is not without its challenges. Balancing financial returns with ethical considerations can sometimes be complex but, contrary to popular belief, incorporating moral criteria into investment decisions does not necessarily lead to lower returns. Both in Spain and Europe as well as in the United States, the application of faithful investing criteria allows not only to achieve higher returns in a sustained and persistent manner over time but also provides perfectly diversified investment portfolios, being able to have a presence in every one of the productive sectors according to the GICs classification.

Despite these challenges, faith based investing offers investors an opportunity to align their financial goals with their moral and ethical beliefs. By investing in companies that reflect their values, individuals, and institutions can contribute to positive social change while potentially achieving attractive returns on their investments. As awareness of the interconnectedness between finance and values continues to grow, faith based investing will remain a significant force in the world of finance.

In conclusion, faith-based investing serves as a powerful reminder that financial decisions need not be separate from personal convictions. By prioritizing investments that resonate with their values, faith-driven investors can create a meaningful impact, promoting a more ethical and just economy. As more people recognize the influence of their financial choices, faith-based investing is likely to grow, paving the way for a future where profit and purpose go hand in hand, shaping a world that reflects both economic success and moral integrity.

Founder of Altum Faithful Investing, Borja Barragan, together with a team of professionals both young and old, helps and advises religious institutions in the field of investment and financial asset management with a criterion based on the Social Doctrine of the Church.

How can a religious institution or a diocese professionally manage an investment portfolio, and is it possible to know whether the companies or funds in which they invest are fully aligned with the Magisterium of the Church? To answer and help with these questions Altum Faithful Investing was born, a financial advisory firm that combines solid and stable wealth growth and the application of Catholic principles founded by Borja Barragán.

The idea was born out of Barragán’s awareness of his own personal and matrimonial vocation. As he points out in this interview with Omnes, he was surprised to learn about the abusive commissions charged to religious for these services and the lack of alignment of some investments with the Social Doctrine of the Church.

How was a company like Altum Faithful Investing born? – Borja Barragán

-Seven or eight years ago, I was studying for a Master’s degree in Family Pastoral Care at the John Paul II Institute. For me, on a personal level, it was an absolute rediscovery of the vocation to marriage: God is once again at the centre of your vocational married life… And, therefore, the rest of things are also coming into order.

Among the Master’s students there were also religious men and women. They knew that I was involved in financial matters, because I have always worked in investment banking, financial markets, investment portfolios, etc., and they consulted me on these matters. In that respect, there were two things that really caught my attention. The first was the issue of commissions, the very high commissions charged to religious people. On the other hand, there was also the lack of coherence between some of the portfolios of the religious and the faith professed. This was not due to bad intentions, but because they trusted those who had “advised” them.

I believe that one of the first aspects that we have to take into account in the logic of the gift is to manage it correctly. Many religious institutions have a large part of their patrimony derived from donations made by the people and, faced with the gift received, you have the task of managing it well.

I noticed a vacuum. There was no one who had the vocation and the will to try to manage this heritage in a way that was coherent with the faith in order to help religious institutions in a professional way. Because we are very clear that being “Catholic” does not exempt us, on the contrary, from being very professional.

From that point on, there was a powerful process of discernment. I spoke with my wife, with several priests and also in front of the Tabernacle, thinking about how to put my talents, what I am good at – financial management – at the service of institutions that have accompanied me throughout my life.

Until relatively recently, it was rare to hear the terms “investments – Church” combined. Do you think there is professionalism in this field or is there still a long way to go?
-I believe that management in dioceses, religious institutions, etc., is done in the best possible way. The fact that there are trained bursars at the head of these institutions is already an achievement. It is true that there are very big cultural differences between the Anglo-Saxon or Central European world and the one that has existed for a long time in Spain.

The approach is completely different in Anglo-Saxon culture. For them, from the “gift received”, for example, of wealth, comes the obligation to manage and administer it in the best possible way, with professional people.

On the ethical side, the push has come in recent years. In 2018, the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life published “Economy at the service of Charism and Mission” and, also in 2018, the Congregation for the Doctrine of the Faith and the Dicastery for the Service of Integral Human Development published “Oeconomicae et Pecuniariae Quaestiones. Considerations for an ethical discernment on some aspects of the current economic and financial system“. Those were the first major steps that were later developed in the recent document “Mensuram Bonam“.

Clearly the Church is realising that there is a patrimony to manage well and it is not for religious to buy Ferraris. But because, in order to do good, you need goods. You have to see how to make those goods bear fruit in the best possible way.

The main difference with the Anglo-Saxon world is that they have been working for 300 years with the concept of endowment.

Before setting up Altum, I went to Harvard for training. There I got to know the concept of endowment in depth. In the case of universities, for example, the endowment is managed with the needs of students in 50 years’ time in mind, so that they have the same opportunities as today’s students. Something similar happens in the congregational and diocesan world: these assets are there to meet the needs of vocations in 50 years’ time. In order to take care of such a long time horizon, the tolerance for risk has to be greater.

If we look at which assets have performed best, which have given the best returns, in the long term there is no doubt that the assets that have best withstood inflation are equities, not bonds. That is where financial science comes in to help religious entities to have a balanced management of their assets. It is not saying that everything should go into equities and that all risk should be taken, but that they should be able to take a risk appropriate to their own risk tolerance. In line with their capacity and, above all, good for their time horizon.

If we are short-sighted and focus only on taking on risk-free portfolios, the objective of guaranteeing the same opportunities in 50 years’ time, I guarantee you, will not be achieved. Inflation will simply eat up that wealth.

And is this idea of avoiding short-termism and taking on risk catching on?
-Little by little. Our own clients tell us so. Many come from the “deposit world” before 2008. In 2008, with the big crisis, interest rates disappeared, nobody gave anything for the money. Now they can give a little more for these deposits, and the request they make is to see how to assume a little more risk in order to be able to look beyond 5 years.

Another thing we see is that, more and more, the people who are in charge of the administration of these types of institutions are looking to be prepared. They are asking for training to be able to have a conversation on an equal footing with the banks they sit down with.

Don’t you think that, even so, words like “risk” or “profit” in the Church give rise to some hesitation?
-The word risk in the Church can be a bit scary, but it is the missionaries, the religious, who have taken a bag and, without a euro in their pocket, have crossed the world to go on missions in hostile countries. For me, that is a risk.

In any case, we should be more concerned, not so much about whether Church institutions make a profit on investments, because we know that this profit is to be invested in the upkeep of churches, in aid to charity, etc., but about how this profit is obtained and what it is being used for.

You have recently launched a system of certification of funds under criteria based on the Social Doctrine of the Church. How do you carry out this certification?
-You cannot analyse a company by the private life of its CEO or the behaviour of its employees. To do it in an objective way – we are talking about investments – we have to look at two aspects.

The first is to know whether the activity of the company conflicts with the Magisterium of the Church or not. We are looking for companies to be what they are. Not that they should be flying the cross and praying the Angelus, but that they should provide a series of goods, services, quality products, at affordable costs, that they should treat their employees well and pay them, and so on. That is what is required of a company. This is what we mean when we say that the activity it carries out does not conflict with the Magisterium. The second part refers to the practices of the company as a company and whether or not they conflict with the Social Doctrine of the Church. For example, we can invest in a company that makes tables; something that, at first glance, does not conflict with the Social Doctrine of the Church. But what if this company’s philanthropic policy includes making large donations to Planned Parenthood; does it make sense for me, as a Catholic, to be financing a company that donates to projects that are clearly contrary to the Church’s morals and Magisterium?

The first step is to analyse the companies, through a whole methodology that we have and through Altum’s investment guidelines, so that neither the practices nor the activities conflict with the Social Doctrine of the Church. We work mainly through direct dialogue with companies, which is called engagement. In 2022 we made more than 600 engagements with companies to “walk in truth”. When faced with controversial information from a company, we want to know their opinion. Not because we are the fairest but because, also in our methodology, we are guided by the see – judge – act approach that the Social Doctrine of the Church supports. In order to judge and act, in our case, we first have to see.

What points are important for an institution when it comes to investment advice?
-I think there are three key points.

The first is trust – independence. They have to have full confidence in the person who is going to advise them. That trust has to come from independence. In many cases, financial advisors are paid by the banks, or in the case of non-independent entities, they are paid by the banks and the investment funds they place with the client, and there is a clear conflict of interest: what is offered to the client, what suits him best or what generates the most commission for the bank or banker?

In addition to this, professionalism must be added to this first point. Any financial advisor must be an advisor regulated by the Comisión Nacional del Mercado de Valores (National Securities Market Commission) in the case of Spain.

Secondly, not everything goes. When the banker comes along and presents investment products, socially responsible investment is sold a lot to religious people, but the current approach to socially responsible investment can conflict with the Magisterium. For example, you can have a company that has a very good ESG (environmental, social and governance) rating because it has no toxic emissions, the shareholder board is 50/50 male and 50/50 female and all stakeholders are delighted. But if that company is doing embryonic stem cell research, should we invest there? No. Not everything goes, and this is one of the reasons why investment fund managers have asked us for this qualification.

Thirdly, real estate. In many cases, you have to let go of past attachments to be able to look to the future. Houses or communities have to be closed to ensure the survival of the institute for the next 100 years. This management, in which we find assets that are complicated from an urban planning point of view, but also very juicy for investment funds, requires professional accompaniment, unless they are experts in real estate issues.

Perhaps less well known but equally striking is your involvement in projects such as Libres. A new patronage?
-Within the large multinationals, there is the possibility of charities, acts of donation. When I worked in banking, I always found that when I wanted to donate to religious institutions, the answer was “No”. Why? Because they are religious. I thought that, when I had my company, I wanted to help religious life, which helps me so much.

In Altum we have the Altum100x1 programme: As a company, the dividends that would be paid to the shareholders (I am the only one), are donated to evangelisation projects that have to have at least one of these three characteristics: promotion of prayer, promotion of the mission and the formation of vocations.

We have been supporting projects for several years now and in the case of Libres it was absolutely natural. From a seed, a production such as Libres has come out, which makes known the lives of those people who, quietly, support us and it is a way of promoting all this.