SEI launches two new funds tied to Catholic social, moral principles

By Toni Weeks

San Luis Obispo, Calif., May 4 – SEI announced the launch of two institutional funds that aim to provide Catholic institutions with high-quality, multi-manager products that align with their core values without sacrificing diversification or return potential.

The Catholic Values Fixed Income Fund and the Catholic Values Equity Fund were created to align with the investment directives set forth by the United States Conference of Catholic Bishops, according to a press release.

“Many faith-based organizations today are seeking solutions that allow them to better align their investments with their core values while still achieving the portfolio diversification and performance needed to support their missions and goals,” Paul Klauder, vice president and managing director of SEI’s Institutional Group, said in the release. “SEI’s social screening capabilities allowed us to create these custom, multi-manager funds for institutions dedicated to investing in conjunction with Catholic standards.”

The funds, which are part of SEI Catholic Values Trust, seek to make investment decisions consistent with the principles of the Catholic Church with respect to a range of social and moral concerns that include protecting human life, promoting human dignity, reducing arms production, pursuing economic justice, protecting the environment and encouraging corporate responsibility. This will be accomplished through the reliance on the principles contained in the U.S. Conference of Catholic Bishops’ socially responsible investing guidelines.

As previously reported, the funds’ investment adviser, Oaks, Pa.-based SEI Investments Management Corp., first evaluates potential investments for financial soundness and then according to each fund’s social criteria. It has retained a third-party environmental, social and governance (ESG) research firm to compile a list of restricted securities, using principles contained in the guidelines, in which the fund will not be permitted to invest.

According to the press release, SEI has been designing socially responsible investing screens and environmental, social and governance overlays for its institutional clients for more than 10 years. The company currently manages more than $18 billion in global assets that incorporate social screening.

Fixed-income fund

The Catholic Values Fixed Income Fund seeks a high level of current income with the preservation of capital. Under normal market conditions, it invests at least 80% of its net assets in a diversified portfolio of corporate bonds and other debt obligations of varying maturities, which may include floating-rate and variable-rate securities. It may also invest in securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities.

The fund will invest a significant portion of its assets in bonds rated within the four highest credit rating categories, attempting to maintain an overall credit quality rating of A or higher. Up to 20% of its net assets in bonds may be rated below investment grade, and the fund may also invest in bank loans in the form of participations and assignments of all or a portion of the loans from third parties.

Steven Treftz of SEI is the head portfolio manager. Each of the three subadivsers are also providing portfolio managers as follows: Jack Sommers, Bill O’Malley and Ed Ingalls from Income Research & Management; S. Kenneth Leech, Carl L. Eichstaedt, Mark S. Lindbloom, Michael C. Buchanan and Chia-Liang Lian from Western Asset Management Co.; and Leech from Western Asset Management Co. Ltd.

Annual fund operating expenses are expected to be 1.11% and include a 0.35% management fee.

The stock symbol is CFVAX.

Stock fund

The trust is also offering a stock fund, the Catholic Values Equity Fund (Symbol: CAVAX).

The stock fund seeks long-term capital appreciation and will invest at least 80% of its net assets in a diversified portfolio of common stocks and other equity securities, which may include preferred stocks, warrants, participation notes and depositary receipts. The fund primarily invests in securities of domestic companies but may also, to a lesser extent, invest in securities of foreign companies, including those in emerging markets. Although it may purchase securities of companies of any size, the fund generally invests in larger companies.

Gregory L. McIntire of SEI is leading the portfolio management team. As with the fixed-income fund, each of the subadivsers have their own portfolio managers, as follows: Lawrence G. Kemp from BlackRock Investment Management, LLC; Patrick S. Kaser, Paul R. Lesutis and James J. Clarke from Brandywine Global Investment Management, LLC; Montie L. Weisenberger from EAM Investors, LLC; Paul E. Viera from Earnest Partners LLC; Paul Bouchey and Thomas Seto from Parametric Portfolio Associates LLC; Joshua Schachter and Anne Wickland from Snow Capital Management, LP; and Eric Becker and Gus Zinn from Waddell & Reed Investment Management Co.

Annual fund operating expenses are expected to be 0.6% and include a 1.29% management fee.

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