Acton Institute Powerblog

Value investing: Restoring ownership and ethics to investment

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In today’s global economy, it can be easy to feel like robotic worker bees or petty consumer fleas in a big, blurry economic order. The feeling is understandable. Value creation, even at its largest margins, is increasingly difficult to spot.

That’s not necessarily a bad thing, of course. Size, scale, and efficiency all have significant perks. But while we should be wary of the modern to temptation to blindly castigate “big business” only because of its bigness, we should also be mindful that consolidation and centralization do, indeed, come with their own assortment of risks and blind spots.

Which brings us to the more basic question: As our economy continues to grow in size and complexity and efficiency, what might we lose if we’re not paying attention? I’ve outlined some of those risks as it relates to the effects of economic modernity on trade and consumerism, family and child-rearing, and physical labor, but the areas of impact are endless.

In a new video from the Denver Institute for Faith and Work, we see how the same pitfalls and tendencies can occur when it comes to investment and ownership. And one of the ways we might respond:

Mutual funds are one the most popular ways that people choose to invest, yet they offer little visibility into what, exactly, the funds are supporting. What do our investments actually purchase? What kind of ownership are buyers stepping into?

For many, those questions warrant a shrug, at best. For Eventide, a Boston-based asset management firm, those are questions worth answering, requiring inputs and information that go well beyond balance sheets and surface-level measurements of financial health.

“As an investor in mutual funds, not only do you not have any idea how the companies you own are being operated, you don’t even know what you own,” says Eventide’s Jason Myhre. “Investing’s original and most basic purpose is about supplying capital to create businesses. But today investing has really become divorced from that ownership idea, and people are really seeking to profit from the market itself as an abstract entity.”

This isn’t to say that mutual funds are “bad.” They have a productive and fruitful place in financial stewardship. But again, in a world where this represents the status quo of everyday investment, what might we lose if we’re not attentive to the underlying distinctions? Eventide seeks to restore that care and concern among investors, offering an opportunity to regain an ownership mentality of investment and, more importantly, know what comes with it.

“The thesis is that investing is ownership,” says Finny Kuruvilla, the company’s CIO. “You’re connected to these companies via your fund manager. So you’ll be a .001% owner of some company, and ownership should invite us to consider more carefully, ‘Well, what are the things do we own?’ You then have some ethical degree of involvement with the activities of that company.”

To assess each company, Eventide uses what they call a “Business 360” approach, grading how the business engages with a wide range of stakeholders, including customers, employees, supply chain participants, host communities, the overall environment, and broader society. Some might be tempted to call this a varied approach to “social entrepreneurship,” but for the folks at Eventide, they’d prefer that we avoid the common dichotomization between “social good” and “profitability.”

“When we talk about investing, in our minds, we tend to dichotomize what’s smart and what’s right,” says Myhre. “But for Biblical thinkers…and I think the call of any believer today, is to not see those as separable concepts. So when we talk about investing and this idea of value creation, it’s not ‘profit takes this path’ and then ‘social good takes this other path’ and we’re trying to hold them together with some kind of a linkage or make some kind of a trade-off decision. We believe that what is right is also what is smart.”

In an economic order that is increasingly big and blurry and difficult to navigate, and amid a culture that prefers investment via routine deposits/withdrawals, Eventide reminds us that we can still prioritize intentional ownership in the information age, using human wisdom, human conscience, and spiritual discernment as stewards in service of the Supreme Investor.

“Conscience is there,” write Gerard Berghoef and Lester DeKoster in their book, Faithful in All God’s House. “We need not, and could not, create it. But how exciting a challenge to enlist its voice in our efforts to serve the Christ through obedience to the divine Law in the form of good stewardship.”

Joseph Sunde is an associate editor and writer for the Acton Institute. His work has appeared in venues such as The Federalist, First Things, The City, The Christian Post, The Stream, Charisma News, Juicy Ecumenism, Ethika Politika, Made to Flourish, and the Center for Faith and Work. Joseph resides in Minneapolis, Minnesota with his wife and four children.

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