Posted in MINNEAPOLIS 8:25 pm Jan 23, 2008 – LONDON 02:25 24 Jan
JO’BURG 04:25 24 Jan – MANILA 10:25 Jan 24 – SYDNEY 13:25 24 Jan

“All things are lawful,”
but not all things are helpful.
“All things are lawful,” but not all things build up.
(1 Corinthians 10:23 ESV)

By Gloriscope staff

The Timothy Plan, an evangelical Christian mutual fund group based in Orlando, Florida, was the top-performing faith-based U.S. fund group in 2007.

It outperformed 35 other faith-based fund groups in the country, including Catholic, Southern Baptist and Presbyterian funds.

The Timothy Plan, managing about $500 million, proved that a strict focus on a biblically-based, God-honoring investment strategy can yield impressive financial returns to investors.

“We want to honor Jesus Christ in all we do,” Timothy’s founder and President Art Ally told Gloriscope. Timothy’s website says that their commitment is “to conduct every phase of our business in a manner that brings honor and glory to our Lord Jesus Christ.”

Timothy’s flagship Large/Mid Cap Value fund, with net assets of $105 million, had a return of 17.02 per cent in the calendar year 2007. Over the past five years, this fund had an average annual return of 18.6 per cent.

Five star rating

Timothy’s Large/Mid Cap Value fund (TLVAX) had a five star overall rating by Morningstar, the fund tracker, in December 2007 (the latest monthly rating available). The Morningstar Star Rating is a rank based on a mathematical calculation that examines relative historical risk and return. If a fund scores in the top ten percent of its investment class (the “Domestic Stock” class in the case of TLVAX), it receives the highest rating of five stars. Star ratings are recalculated monthly.

Performance of a fund of course depends on the knowledge and experience of its managers. Timothy’s funds are managed externally, not in-house.

The Timothy Plan’s founder and President, Art Ally, told Gloriscope that it was difficult for them to attract good managers when they started Timothy Plan in 1994, “but now we can attract any manager.” Art Ally said Timothy’s two value funds are managed in Dallas, Texas, the two growth funds in Pennsylvania and the international fund in Houston, Texas.

Investment philosophy

The defining characteristic of faith-based investment funds is their filtering out of all stocks that do not meet a set of religiously-based criteria. The Timothy Plan, which brands its filtering philosophy as “morally responsible investing,” says on its website that it is “steadfastly committed to maintaining portfolios that do not contain the securities of any company that is actively contributing to the moral decline of our society.” Timothy filters out about 800 companies, Ally told us.

Timothy’s website declares that 1 Timothy 5:22 provides a stewardship principle for their investment philosophy. That passage in the Bible says, “Do not lay hands upon anyone too hastily and thus share responsibility for the sins of others, keep yourself free from sin.”

What does that mean in practice? The Timothy Plan says that they screen out companies that are “involved either directly or indirectly in abortion, pornography, anti-family entertainment or alternative lifestyles,” as well as those directly involved in the production of alcohol, tobacco or gambling.

The screening approach

Gloriscope asked Timothy’s President Art Aly how theit screening process is carried out in practice. He told us that screening is done in-house and that all staff at their headquarters are Christians. “We research companies, document what they are doing, and I can tell you we uncover a lot,” Ally told us. ” We do the screening research and then we give the lists of companies to our external fund managers. Our trustees meet quarterly to review our strategy.”

Gloriscope wanted to know whether Disney’s stock, for example, would be screened out or not. “They are on top of our screening list,” Ally told us. “We would never invest in Disney. They’ve failed every screen we’ve got.”

Investment objectives

Gloriscope also asked Art Ally abiut Timothy’s main investment objectives. He said that the number one thing their investors want to know is in which companies Timothy chooses to put their money.

He said that the number two concern is investment safety: “People say ‘Don’t lose my money, don’t be a cowboy with my money.’” A competitive return on investment is the number three concern of Timothy’s investors. And the Timothy Plan’s performance so far shows that all three investment objectives can be met together and over time.

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TO GOD BE ALL THE GLORY!

Published in the U.S.A. Copyright © 4T4C News Corp. 2008. All rights reserved.