Faith-Based Fund Shuns Video-Game Stocks

Investors looking to strip their portfolios of companies that voilate their religious values have been increasingly turning to faith-based mutual funds (see our recent story on the subject.) These include Ava Maria Catholic Values, whose advisory board includes Larry Kudlow, the founder of Domino's Pizza, and a real, live Cardinal; the Amana Growth fund, which has built an impressive record investing in line with Islamic principles; and the Timothy Plan, which screens out companies that violate its fundamental Christian beliefs.

Timothy, headquartered near Orlando, Fla., outlaws companies involved directly or indirectly in the following: alcohol, tobacco, gambling, pornography, abortion, and "alternative" and "non-married" lifestyles. The funds also shun companies that sponsor racy or violent TV shows. Members of Timothy Plan's "Hall of Shame" include Walt Disney, Starbucks, Pfizer, Johnson & Johnson, and Coca-Cola.

Add video-game stocks to the list. Just in time for Christmas, Timothy has released a report identifying games "parents should think twice about before letting Santa put them under the tree."

The cover features an illustration of a father sleeping on his couch while his kid plays video games in the foreground with maniacal glee. Inside, a scorecard rates games including Grand Theft Auto, Mass Effect, Fallout, and World of Warcraft. Those, unsurprisingly, are not in Timothy's good graces.

Interestingly, the report doesn't include the names of companies that own these games, but you can assume that stocks like Take-Two Interactive, Electronic Arts, and Activision Blizzard are off-limits.

Prospective investors should take note of the Timothy Plan funds' records: Its Large/Mid-Cap Growth is down 39 percent so far this year (that's ahead of 85 percent of large-company growth funds), and it has lost an average of 5 percent annually over the past five years. That return lags behind roughly 30 percent of its peers. Timothy's Conservative Growth fund, which is about 40 percent bonds, is down 33 percent this year, and has lost an annualized 2 percent over the past five years.