FaithShares Trust, an Oklahoma-based investment company that made a splash when it launched a suite of faith-based exchange-traded funds in December 2009, will fold four of its five funds next month.

The funds slated for the chopping block are the FaithShares Baptist Values (FZB), Catholic Values (FCV), Lutheran Values (FKL), and Methodist Values (FMV) funds. The FaithShares Christian Values (FOC) fund will be the sole survivor.

"It all boils down to economics," says FaithShares CEO Garrett Stevens. "We didn't get enough assets in them to warrant keeping them open. We're losing money at those asset levels."

Stevens notes the one fund to remain open, the Christian Values fund, is also in the red. "But we figured our resources are better spent on keeping open one fund and focusing on that rather than five funds," he says.

Each of the funds are based on custom indexes calculated by MSCI and based on screening set by FaithShares. The company's fund selection process screens the 400 largest U.S. companies for alcohol, tobacco, pornography, gambling, abortion and weaponry considerations. The 100 stocks that make the cut are ranked based on environmental, social and governance criteria. Each fund has 100 stocks in its portfolio that are equal weighted for a 1% position in the fund.

FaithShares says each denomination varies on their tolerance to different issues that are screened, so the funds are similar but not identical.

All of the funds have an expense ratio of 0.87%, which is high for passively-managed funds that are rebalanced once a year each June.

Depending on the fund, they've performed comparable or better than the S&P 500 since their inception. So it's not like they haven't attracted investors because they're stinker funds.

Stevens believes the funds failed to attract assets for two main reasons. One relates to marketing. "Our marketing efforts obviously need to be better," he says. "We're surprised by the number of people just now hearing about us after we've been out there for a year-and-a-half. That's frustrating."

The other part of it, Stevens offers, is the retail-oriented nature of the funds--and the specific niche they appeal to--makes for a built-in limited audience.

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