Religion is defined as “a cause, principle or system of beliefs held to with ardor and faith.”

There are more than 4,000 religions in the world. The biggest, with a little more than 2 billion adherents, is Christianity. Next, with a little less than 2 billion followers, is the Islamic faith, which is also the fastest-growing. By around the year 2060, if estimates hold, Islam will grow 70% and be the world’s dominant religion.

Most major religions are expected to grow by midcentury, too, just not as much: The number of Christians is expected to grow 34%; Hindus, 27%; and Jews, 15%.

This is important intelligence for the world of investing. Clearly, it means more attention must be given to Muslims, but there is also a more general takeaway: It means most people in the world, 84%, operate by some form of belief system. Indeed, values-based investing is on the rise. The Wall Street Journal recently noted this in a headline, “Financial Advisers Put Faith in Religion-Based Investing.” It found more advisors are helping clients coordinate their financial and spiritual lives.

The challenge for advisors is to quantify those ethereal values and articulate them, when possible, in the capital markets.

To be sure, there are myriad religious funds and ways of investing. According to research published in the Journal of Applied Business and Economics, there are 71 open-end mutual funds defined as faith-based. That, of course, doesn’t include managed accounts and bespoke portfolios offered by RIAs for religious clients.

Goals and beliefs are unique. But faith is a good and wide first filter for building a universe of investments that might appeal to an investor; it’s a soft hook.

Saturna Capital's Amana Fund family was built on the fundamentals of Sharia, or Islamic religious law. Its first fund, the Amana Income fund, was launched in 1986. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest and that they stay away from businesses involved with alcohol, pornography, insurance, gambling, pork processing and interest-based banks and finance associations. The fund does not make any investments that pay interest. Also, Islamic principles discourage speculation, therefore the fund tends to hold investments for several years.

From this foundation, Saturna has evolved into a multifund investment management organization. It has 13 funds under its umbrella and $4.5 billion of assets under management.

Patrick Drum, the portfolio manager who heads up Saturna’s ESG research, says all the funds, which now include Saturna bond and equity funds, as well as the Sextant family of funds, share the same core principles (not necessarily Sharia, unless stated). The investors start with the clients’ personal values and appetite for risk. He points to Saturna’s “values matrix,” which encompasses personal values, philanthropy, faith, advocacy and other thematic interests.

“While Saturna Capital manages multiple asset classes and a variety of strategies,” Drum says, “the main principles of our investment process are cohesive. We abide by seven core values which guide our business and approach to asset management. These values include acting with discipline, limiting leverage and valuing accountability and transparency.

“Our process has withstood multiple business cycles and investment seasons, and we see it as one of our greatest strengths,” he adds.

In a discussion about impact and SRI at Financial Advisor magazine’s Inside Alternatives & Asset Allocation conference in September, Drum took the stage with Joe Levin from BlueStar Indexes, a provider of financial indexes rooted in the Israeli market. The two discussed almost the exact same challenges and opportunities involved in garnering large pools of capital that must adhere to a religious belief system (even if their funds are guided by different religions).

Even if investors share a certain set of beliefs with Jewish institutions, such as philanthropic organizations, the fundamentals of the investments have to make sense, Levin says. That means the return on investment has to be at or above the market’s return.

But the risk/return optimization is not the end all, be all. “When valuing a security, for instance, you use a discount rate made up of different factors like the risk-free rate, inflation risk, liquidity risk and, now, SRI risk. Technically, this could be graphed as an indifference curve showing the trade-off between the tracking error one is willing to accept versus the level to which a portfolio reflects one’s values,” Levin explains.

SRI, or socially responsible investing, is the banner under which faith-based investing often moves. The world’s biggest investment management concern, BlackRock, expects SRI to skyrocket over the coming years. Laurence Fink, the firm’s CEO, is betting assets under management in SRI exchange-traded funds will zoom to $400 billion from $25 billion in a decade.

That growth, of course, will likely stand on how well investors do in the markets using SRI investment vehicles. SRI funds have a mixed track record, which means they may have to start performing better to rake in billions more in assets.

Data show faith-based funds are on par with the overall mutual fund industry’s ROIs, and in some cases may even outperform. In the private markets, a “values” approach is now called impact investing, an asset class the Vatican, for one, has embraced, going so far as to hold an annual impact investing meeting at Vatican City. The conference brings together thought leaders, impact investors and religious leaders from all over the globe to promote human development by leveraging finance. Putting some teeth to it—the not-for-profit Catholic Relief Services has launched a program-related investment fund that invests in social and humanitarian programs to help lift people out of poverty and other trying circumstances. The fund’s first impact investment was in 2016 when it provided a $500,000 loan to an agricultural business in Madagascar.

Drum and Levin both say the specific religious values their funds adhere to are almost incidental to their investment process and performance mandates. “While religious values inform our drive and passion, BlueStar’s investment approach is purely designed to apply the best of institutional quality index construction to the Israeli capital markets,” Levin says, adding, “You don’t have to be Jewish to have Israel in your heart. In fact, a large and diverse group of Christian denominations actively support Israel and thus are adopting Israel equity allocations within their values-driven portfolios as well.”

Drum notes that risk and best practices are agnostic. “Over half of our clients choose Saturna for reasons other than our faith and values-based focus. Our investors look to us for our deep experience and tenure in demonstrating competitive investment returns,” he says.

But he says faith-based investing presents a clear opportunity for financial advisors “whatever the values and interests are.” Faith is a differentiating factor, and he says one of the best ways for financial advisors to differentiate their own practices is to help clients incorporate those values and interests into their investments.

Effectively, this becomes an ethically tailored investment policy statement that can be tactically implemented. Screening, then, involves seeking out more sustainably managed companies in which to invest. Many studies claim a more ethically centered management increases the probability that a company will succeed. A widely quoted study by LRN, a New York-based consultancy, found that among high-performing companies, two-thirds are increasingly focusing on values instead of rules. “That compares with one in three of the lowest-performing companies,” the study says.

Investors in private placements, too, are interested in values. Even faith-based private equity funds are gaining in popularity. The Global Impact Investing Network (GIIN) recently highlighted the work of Christian Super, an Australian superannuation fund that invests in private equity on the principles of the Christian faith.

However, it’s in the public markets that the rise in faith-based investing is showing its might.

The Interfaith Center on Corporate Responsibility (ICCR) has 300 members representing faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $400 billion. ICCR members engage hundreds of public corporations annually in an effort to foster greater corporate accountability and to effect social change. And it’s working: The number of companies in the S&P 500 that issue sustainability reports has risen to more than 80% of the 500 index names, up from just 20% in 2011. Sustainable investments now capture one out of four dollars invested in the capital markets, up nearly 40% from the numbers a year ago.

Whether it’s public or private, pooled fund or individual portfolio, investors seemingly are opting to trade more and more on faith. For faith-based advisors, things should be looking up.