We’ve long had ‘Shariah loans’. Now Vatican Bank is launching Catholic stock indexes

If you were looking for some left-of-field news from the world of markets and finance on this Wednesday morning, look no further than the Vatican: Its bank (Vatican Bank, can you believe it’s called that?) has launched, for the first time, two Catholic-morals-linked stock equity indexes.

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Those two indexes, both branded products of Morningstar, launch ‘Catholic Principles’ indexes for the Eurozone and the U.S. Each index is to include 50 companies that align with the overall Catholic mission – so one would think no defence stocks, nothing like Palantir, probably no animal testing, stuff like that.

The Morningstar website shows a limited list of what those 50 companies across each index are; by and large, there’s nothing too shocking. As of Wednesday morning, Sydney time, the U.S. Catholic Principles index is slightly down; the Eurozone is slightly up.

That’s largely because the U.S. Catholic Principles index is, well… they’re just investing in tech stocks. Nothing too groundbreaking there.

And I’m not sure if investing in JP Morgan is exactly aligned with Catholic principles either, but let’s not go there.

As for the Eurozone index:

A lot of financials, and again, exposure to tech via microchip maker ASML.

In other words, the Vatican Bank’s aggregate Catholic Principles index is identical to God-knows-how-many ETFs already out there. Some commentators have pondered whether this sets the stage for the Vatican Bank to release more ETFs in future; one is left to ask how differentiated a product they could hope to come up with.

(Also worth noting is the Vatican’s finance arm is already a large investor in many European stocks with a particular focus on Italy, naturally.)

So what do we make of all this?

Well, look. In reality, this is a PR stunt. I think anybody can see that.

But it does make for an interesting counterpoint to the world of Islamic finance and Islamic banking, which have long offered Shariah loans – with those increasingly landing on Australian shores in recent history.

In fact, NAB (ASX:NAB) offers Islamic finance products to its customers; interest rate payments aren’t allowed under Shariah law. There is also Sukuk, which is the same deal, and ultimately the ‘Islamic version’ of bonds.

At any rate, today’s news from the Vatican shows another attempt from the Roman Catholic heart to modernise and, perhaps, make itself relevant.

At least this time, they haven’t released an anime mascot called Luce.

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