Do God and smart beta mix? Evidently, the answer is yes based on the successful asset gathering achieved by two exchange-traded funds that debuted earlier this year from Timothy Partners Ltd., a Maitland, Fla.-based firm focused on biblically responsible investing, or BRI.
And the firm this week rolled out two new ETFs that track volatility weighted indexes from Victory Capital Management Inc. that employ screens based on BRI criteria. The underlying indexes for both funds—the Timothy Plan U.S. Small Cap Core ETF (TPSC) and Timothy Plan International ETF (TPIF)—exclude companies involved with alcohol, tobacco, gambling equipment or gambling enterprises, abortion, pornography, or promoting anti-family entertainment or non-biblical lifestyles.
According to fund literature, they can also exclude companies with practices judged to be offensive to traditional Judeo-Christian values.
For now, one can’t tell how that translates into actual portfolios because the fact sheet and holdings information for these two funds aren’t available yet. But we do know the international ETF charges an expense ratio of 0.62%, while the small-cap core product charges 0.52%.
The latter fee is the same charged by the firm’s two existing ETFs that launched last May—the Timothy Plan Large Cap Core ETF (TPLC) and Timothy Plan High Dividend Stock ETF (TPHD).
These products also track volatility weighted indexes developed by Victory Capital Management, an ETF provider that specializes in factor-based investing strategies.
The TPLC fund has $116.6 million in assets under management, and TPHD has $84.2 million. That’s not bad for seven-month-old funds.
BRI-based funds obviously appeal most to investors who want to invest according to BRI principles. But they can also add value for investors who don’t care about that stuff.
For example, the Timothy Plan Large Cap Core ETF compares favorably to the First Trust Large Cap Core AlphaDEX Fund (FEX), a product that launched in 2007 and has $1.3 billion in assets. TPLC is up 6.9% since it launched, which slightly trails the 7.2% gain from FEX during that period.
But according to XTF.com, the Timothy Plan’s large-cap core product’s Sharpe ratio during the past six months is 2.04 versus 1.64 for the First Trust product (a higher score denotes a more attractive risk-adjusted return), while its standard deviation of 12.91 compares to 13.96 for FEX (a lower number implies lower volatility). In addition, the Timothy Plan fund is cheaper by nine basis points.
Along with its four ETFs, the Timothy Plan fund complex also includes 12 mutual funds.