The Vatican Bank took a significant step into the realm of thematic investment products on Tuesday by launching two new equity indexes that reflect Catholic values. These are known as the Morningstar IOR Eurozone Catholic Principles Index and the Morningstar IOR U.S. Catholic Principles Index.
Strategically aligning with the ethical criteria of the Catholic Church, these indexes comprise 50 medium and large-cap companies that prioritize social justice and human relationships. According to a statement from the bank, top holdings in the Eurozone index include semiconductor supplier ASML Holding and telecommunications giant Deutsche Telekom, while the U.S. index features heavyweights such as Meta Platforms and Amazon.
Giovanni Boscia, the Vatican Bank's deputy director general and CFO, emphasized the significance of this initiative, saying, "Having benchmarks built in accordance with recognized Catholic ethical criteria allows us to make our performance assessment and reporting processes even more rigorous and transparent." He added, "This initiative reaffirms our commitment as a financial institution serving the Church, further strengthening the role of the [Vatican Bank] as a reference point for the Catholic world."
The debut of these indexes not only reflects a growing investor appetite for ETFs and thematic investment options but also opens the possibility that these indexes could eventually be used in exchange-traded funds. According to estimates from PricewaterhouseCoopers, the global ETF market saw a nearly 30% increase, reaching over $14 trillion in 2024, with projections suggesting a growth up to $30 trillion by 2029.
The appeal of investment products grounded in social responsibility continues to grow among a specific segment of investors. For instance, Ave Maria Mutual Funds, which invest according to Catholic teachings, reported $3.8 billion in assets under management as of last year.
The Vatican Bank's move comes as part of efforts to reform its reputation following past scandals related to money laundering and ties with organized crime, notably after the 1982 collapse of Milan's Banco Ambrosiano. In a more recent scandal, former Vatican Bank president Angelo Caloia was convicted in 2021 of money laundering and embezzlement.