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Catholic Fund Fails to Convince Believers

A fund that was set up to invest in line with Catholic beliefs is to close after its managers lost faith in its ability to attract investors.

The Creation of Adam, from the Sistine Ceiling, 1511 (fresco) (pre-restoration)
Michelangelo Buonarroti | Getty Images | The Bridgeman Art Library
The Creation of Adam, from the Sistine Ceiling, 1511 (fresco) (pre-restoration)

JPMorgan Asset Management had hoped to attract investors who wanted exposure to investments that would not clash with tenets on issues such as birth control and civil rights. It also eschewed investments in governments of countries that have the death penalty.

The aim was to replicate the success of funds compliant with Shariah lawwhich have been in strong demand with Muslim investors.

However, JPMorgan is to liquidate the Global Catholic Ethical Balanced Fundjust over a year since it was launched. At May 31, it had net assets of just 4.3 million euros ($5.24 million), far short of a $30 million threshold outlined in its prospectus.

“The decision has been made because of reduced prospects of attracting new investment into the sub-fund,” JPMorgan Asset Management said in a statement on Thursday. The fund’s net asset value had risen 6.78 percent this year, according to Bloomberg data.

The fund’s genesis was sparked by a suggestion from the fund manager’s Italian sales team and Gruppo Re, an Italian group that provides management and financial services to the Catholic church. Suitable investments were screened by ECPI, a sustainability research firm.

Investments in bonds and equities by the fund, domiciled in the low-tax principality of Luxembourg, were analysed in consultation with an advisory body composed of “high-ranking” representatives of the Roman Catholic church and chaired by a member from Gruppo Re. The fund manager declined to comment on the identity of these representatives.

The fate of the fund stands in stark contrast to the rise of Shariah-compliant products, structured to comply with the tenets of Islam. Demand for Shariah-compliant products has surged in the Gulf and sales of Islamic bonds, known as sukuks, have rebounded strongly in 2011.

“If you look at the support behind Shariah finance, there are some pretty deep pockets,” one analyst said, who could see no reason why Catholics could not find many traditional products suitable. “It wouldn’t appear to be the same for Catholics.”

Investors can redeem their shares or switch into another fund until September 11.

JPMorgan continues to offer Shariah-compliant products.

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