Catholic investment funds are mutual funds, ETFs, and managed accounts that screen their holdings against Catholic moral teaching, using the U.S. Conference of Catholic Bishops’ Socially Responsible Investment Guidelines as the baseline. In practice that means excluding companies tied to abortion, embryonic stem cell research, certain weapons, pornography, and other activities the Church opposes, while also using shareholder influence to push companies the fund does own toward better behavior.
The screening is more detailed than most investors expect. Some activities trigger automatic rejection at any revenue level. Others only disqualify a company if it crosses a revenue threshold. And because the USCCB guidelines leave specific cutoffs to individual managers, two funds marketed as Catholic can hold meaningfully different portfolios.
What Catholic Funds Screen Out
The USCCB guidelines, approved at the bishops’ November 2021 General Meeting, organize screening around a principle of avoiding harm. That principle produces the exclusion lists fund managers rely on. The lists fall into two tiers.
Absolute Exclusions
Some activities disqualify a company no matter how small the revenue stream. The USCCB will not invest in any company involved in abortion, euthanasia, or assisted suicide, including manufacturers of abortifacient products. Companies engaged in embryonic stem cell research, fetal tissue research, human cloning, or in vitro fertilization are excluded outright.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines
The 2021 update added a screen for companies that perform surgeries or administer drugs and hormones intended to delay puberty or modify the body to express an identity different from one’s biological sex.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Pornography producers are also excluded at any revenue level.
Weapons are handled on a tiered basis. Any involvement in weapons the Church considers inherently inconsistent with just war teaching results in exclusion. That category includes biological and chemical weapons, landmines, cluster munitions, and nuclear weapons.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Conventional firearms manufacturers are permitted only if their products serve hunting, military, or law enforcement purposes.
Revenue-Based Thresholds
Other categories use a percentage test. The USCCB guidelines exclude companies whose “primary purpose” is to derive revenue from gambling, tobacco, or recreational cannabis. Contraceptive manufacturers are excluded outright, but companies that sell but do not manufacture contraceptives face a 10% revenue threshold: they’re screened out only if more than 10% of revenue comes from contraceptive sales.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines
Where the USCCB uses language like “primary purpose” or “significant amount” without a hard number, fund managers set their own cutoffs. Christian Brothers Investment Services (CBIS), one of the largest Catholic asset managers, applies a 10% revenue threshold to pornography and to certain fossil fuel activities, including thermal coal mining and oil sands extraction.2Christian Brothers Investment Services. Screening for Catholic Values Another manager might set the bar at 5%, or apply it to a different list of sub-activities. The USCCB itself acknowledges that defining a “significant amount” of revenue “is a matter of prudence as defined in the policies.”1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines This is why two legitimate Catholic funds can reach different conclusions about the same company.
How the Screening Gets Applied
The mechanics look different depending on whether a fund tracks an index or is actively managed.
Index-Based Catholic Funds
The S&P 500 Catholic Values Index starts with the full S&P 500 and removes companies that fail USCCB-aligned screens.3S&P Dow Jones Indices. S&P 500 Catholic Values Index Abortion-related operations, embryonic stem cell therapies, controversial weapons components, and adult entertainment production are excluded at any revenue level. Military contracting companies face a higher threshold of 50% revenue from weapons-related products.4S&P Global. S&P Catholic Values Indices Methodology
As of early 2026, the index held 444 of the S&P 500’s 503 constituents, meaning roughly 12% of companies were screened out. To preserve diversification, the index redistributes the weight of excluded companies to compliant companies in the same sector at each rebalancing.4S&P Global. S&P Catholic Values Indices Methodology That sector-matching step is how Catholic index funds avoid the lopsided sector bets that would otherwise result from dropping dozens of companies.
Active Manager Screening
CBIS screens across five issue categories: life ethics, violence, pornography, tobacco, and targeted fossil fuel producers. Its philosophy is to screen out companies based on what they do, and to use active engagement when the concern is with how they conduct business.2Christian Brothers Investment Services. Screening for Catholic Values The restricted company list is updated quarterly, and a company that passes screening in January can land on the restricted list by March if an acquisition pushes it into a new business line.
Engagement and Positive Screens
Exclusion is only part of what Catholic funds do. The USCCB guidelines also expect managers to use their ownership stake to influence corporate behavior and to channel capital toward companies serving the common good.
Managers vote proxies on issues ranging from board composition and executive compensation to environmental disclosure and human rights reporting. The 2021 guidelines specifically call for proxy voting and corporate dialogue to press for transparency on gender-identity-related medical activities.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Engagement happens even with companies that already clear the negative screens, because passing a screen is not the same as being a model corporate citizen.
On the positive side, managers tilt portfolios toward companies with strong labor practices, environmental stewardship, renewable energy investment, and community development. Impact investing in affordable housing and poverty alleviation also fits here. The practical effect is that a Catholic fund is not simply a standard portfolio with a few stocks removed; it is weighted toward companies the manager views as making a measurable social contribution.
Types of Catholic Investment Vehicles
Catholic screening is available across most of the fund structures a retail or institutional investor would consider. The right fit depends on portfolio size, how much customization you want, and the fees you’re willing to pay.
- Mutual funds. The most accessible option for individual investors. These pool money to build a diversified, pre-screened portfolio with daily liquidity. The simplest way to get USCCB-aligned exposure without doing the screening work yourself.
- Exchange-traded funds. A growing category pairing low-cost index investing with a Catholic screening overlay. ETFs tracking the S&P 500 Catholic Values Index exclude non-compliant companies and rebalance sector weights automatically. Expense ratios tend to be significantly lower than those of actively managed alternatives.3S&P Dow Jones Indices. S&P 500 Catholic Values Index
- Separately managed accounts. Used by dioceses, religious orders, universities, and other institutions with large portfolios. An SMA gives the institution a dedicated portfolio customized to its own interpretation of Catholic screening, which is often stricter than the USCCB baseline. The structure also supports proprietary shareholder engagement campaigns.
Specialized Catholic asset managers, including Knights of Columbus Asset Advisors and CBIS, handle the screening and engagement work behind many of these vehicles. They maintain the research teams, restricted lists, and proxy voting infrastructure that ongoing USCCB compliance requires.
Performance and Costs
The standing question for any values-based investor is whether ethical constraints hurt returns. For Catholic funds, the gap has been small by historical standards.
The S&P 500 Catholic Values Index posted annualized returns of 19.24% over three years, 11.76% over five years, and 13.40% over ten years as of late February 2026.3S&P Dow Jones Indices. S&P 500 Catholic Values Index The sector-reweighting methodology helps explain the resilience: when a healthcare company is excluded for embryonic stem cell research, its weight shifts to compliant healthcare firms, keeping sector allocation roughly in line with the broader S&P 500.4S&P Global. S&P Catholic Values Indices Methodology
Costs vary sharply by vehicle. Among Catholic Responsible Investments funds listed on Morningstar, actively managed funds carry expense ratios ranging from 0.40% for a balanced allocation fund to 1.15% for an international small-cap fund. The passive Catholic equity index fund runs at just 0.09%.5Morningstar. Catholic Responsible Investments Funds Mutual Funds The spread reflects the cost of active research, corporate engagement, and quarterly screening updates. If your main goal is broad market exposure minus the excluded companies, a passive Catholic index fund captures most of the screening benefit at a fraction of the fee.
Checking the Prospectus and SEC Rules
Catholic funds operate under standard securities regulation. Any mutual fund or ETF with “Catholic” or “values” in its name falls under the SEC’s Names Rule, which requires the fund to invest at least 80% of its assets consistently with the type of investment the name suggests.6U.S. Securities and Exchange Commission. 2025-26 Names Rule FAQs The 2023 amendments broadened this rule to cover fund names suggesting a focus on investments whose issuers have “particular characteristics,” which captures faith-based and ESG-labeled products.
A fund can make its 80% policy either “fundamental” (changeable only with shareholder approval) or non-fundamental (changeable with 60 days’ notice to shareholders).6U.S. Securities and Exchange Commission. 2025-26 Names Rule FAQs Checking which type applies matters for a Catholic investor. A fundamental policy locks in the faith-based screening. A non-fundamental policy allows the screening criteria to shift with relatively little notice.
The prospectus is the document that spells out exactly which screens are applied, what revenue thresholds are used, and how the manager handles gray areas. Because the USCCB guidelines leave implementation to individual managers, two funds both labeled “Catholic” can screen differently. Reading the prospectus is the only reliable way to know whether a particular fund’s interpretation matches your own.