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In this episode of Marks on the Markets, Richard Cunningham and John Coleman interview Matt Monson, a public equities investor from Sovereign Capital. 

The three of them discuss various topics related to the markets, including the performance of large cap stocks compared to small cap stocks, the rise of artificial intelligence (AI) and its impact on businesses, the current state of interest rates, and the implications of international conflicts on the markets. 

They also touch on the importance of corporate engagement and proxy voting for faith-driven investors. The conversation concludes with personal reflections on the significance of Passover and the lessons learned from Scripture.

Episode Transcript

Rusty Rueff: Hey everyone! All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham: Well welcome everybody and hello. And it’s episode 171 of the Faith Driven Investor podcast. We are grateful you’re here. My name is Richard Cunningham. You find this recording this at the end of April 2024. John Coleman, as always, one of our mainstays is here in the studio with us from Atlanta, Georgia. And John, we’ve got a great one today is it’s a marks on the markets episode. And one of our guests is someone we admire greatly. A Denver, Colorado native, Matt Monson. Someone you get to work pretty closely with. Matt, we are so overjoyed to have you in the podcast studio.

Matt Monson: Yeah, thanks for having me.

John Coleman: Oh, man, it’s so great. We haven’t had Matt on since 2022, I think was what we said. And look, I just have a ton of respect for this guy. I’ve gotten to work for him, with him for the last three years and just towering intellect in the public equity markets in particular, Matt, and always well prepared. So I can’t wait to hear your thoughts on what’s happening right now.

Richard Cunningham: Oh man, I’m equally excited. Let’s see that intellect on full display today here on this marks on the markets episode. And so without further ado gents, let’s dive in. Equity markets have just made a monumental run. We saw last week a pretty tough week in terms of drawbacks for the equity markets, specifically The Magnificent Seven. But Matt, maybe how did we end up here? How has there been such a soft landing? Is there still upside in these markets. And just kind of orient our listeners as to where we are currently?

Matt Monson: Yeah, that’s a good question. You know, I would say the greatest opportunity for sure is in small and mid-caps and then some select large caps. So remember that seven stocks are driving a lot of the move in the stock market today. So the other 793 stocks in the S&P 500 are not actually all that expensive. So many people know that when they buy the S&P 500, that 34% of their dollars are actually just going into ten companies. Many of those companies were up 50 to 200% last year in 2023. And they’re up significantly again in 2024. So this type of concentration is in these top ten companies is actually the same across many different large cap indexes. So one of my thoughts is just that, you know the labor market here has been surprisingly strong, especially after these monumental rate hikes have taken place. I mean, this was the third largest set of rate hikes in the last ten tightening cycles ever since the 50s. And it could have broken the economy, but it didn’t. And one of my thoughts just share on why that might be is you see it in the surveys. The Small Business Survey for NFIB shows that 40% of small businesses weren’t able to fill the seats that they had open. So even if that tightening reduced demand and someone lost a job along the way, there were so many unfilled jobs just waiting for them that we didn’t end up seeing it result in unemployment rates ticking up.

John Coleman: Hey Matt, I want to dig into this soft landing topic. But before we do, can we pause on this magnificent seven kind of top ten topic for a moment? Because I’ve been trying to think this through, because it’s been a historic run for the last couple of years with those seven stocks in particular, particularly things like Nvidia, Apple, Amazon, Tesla, it’s obviously pulled back quite a lot of those Magnificent seven. And I’ve been trying to understand, you know, how much of this is momentum, how much of this is a flight to quality in those stocks. Because whatever we’d say about them, you know, they are seven of the most successful companies in the world in terms of growth, in terms of profitability. So it doesn’t look like the.com era where there’s this completely inexplicable rise in certain stocks. I mean, these I get why people want to invest in Alphabet or Meta or Amazon or Apple, because the structural growth in those companies and financial stability, those companies actually has been very positive over the last several years. So help me think through just how to read those Magnificent Seven, because I keep thinking there will be a reversion to the mean, and that small caps will catch up to those large caps. Or frankly, 99% of the market will catch up to that 1% of the market. And yet that 1% continues to kind of outpace. So how do you think about the success of those seven stocks, and how much of that is legitimate and sustainable versus how much of that is kind of momentum driven?

Matt Monson: Yeah, I think if you unpack the business models for the seven, they all end up with one common theme in place. They have a technology based monopoly, and we can walk through each one one by one. But for the most part, the business models are really good and they don’t have a lot of competition. And so when we look at companies that have done. Really well over time. Limited competition was always a key factor. And so I don’t think when we looked at them last in, you know, call it months ago, I don’t think the valuations look incredibly stretched even across the Magnificent Seven. And so you’re seeing a lot of the stock price performance being driven by earnings growth and a combination of earnings growth and valuation expansion. But you know that multiple expansion isn’t the standalone reason for stock price performance on those seven.

John Coleman: Yeah that’s my read is they’re actually fundamentally healthy stocks. They may be overvalued relative to some of the competition. But what I wouldn’t expect from them, given what we’re discussing is a dramatic pullback or it doesn’t feel like the same type of bubble atmosphere that you would have gotten during the.com era, right? So you may see a drawback, but my impression is that’s on the order of kind of a ten, 20, 30% reversion to small caps in mid-caps or other large caps rather than, you know, some sort of dramatic, collapse in those securities.

Matt Monson: Yeah, that’s why I see it. And, you know, there’s another theme there, too, is that AI is driving a lot of the growth that we’re seeing in The Magnificent Seven. And, you know, we all maybe have a different view on what I could be, but if it’s going to be the next penicillin and an airplane and the internet, then you’ve got something much bigger on your hands. It’s, you know, at best in the beginning of the first inning here for AI. And so if that’s the case, it’s going to be market size expansion. I mean, it’s really an arms race, right? Because you have so many different CEOs right now that will get fired if they don’t invest in and explore AI. And I’m not talking about the people who are selling it to the rest of us. I’m talking every business is looking into it, and we don’t even know what the financial ROI is going to be from that yet. But no one’s going to be penalized for overspending. People are only going to be penalized for not diving in headfirst at this point.

John Coleman: You know, in the last craze in technology like this that I remember was blockchain, obviously, because cryptocurrencies were linked to that. And there was this distributed ledger technology that was for use in other things. And there was a period of time, maybe 5 or 6 years ago, where everybody was like putting blockchain in their latest earnings release, and they were getting huge bumps for that. If they talked about it. To me, the AI thing seems a lot more legitimate. You know, we had a pullback in that blockchain craze a few years ago. The difference here is that blockchain really required fundamental shifts in the infrastructure of business. And it was almost like the fax machine. A lot of use cases for it required every single counterparty to get on the same blockchain so that they could operate together. AI is interesting because the computing power is obviously much greater than with something like blockchain, which is one of the bottlenecks right now. But it doesn’t require all the counterparties to operate. And we’re seeing tons of interesting use cases come up for that, whether that’s diagnosis in health care, whether it’s cybersecurity applications where you’ve got artificial intelligence, you know, enabling those, you know, just this host of use cases that are springing out of these large language models. And my biggest question is whether those, you know, can continue on pace and whether we can move past the large language models, indeed, to something more like artificial general intelligence, which is, you know, and people stand in different areas. Obviously, Sam Altman is very optimistic about the continued progress of those. I recently saw a podcast, I think it was with Mark Zuckerberg, who was much more skeptical about the near-term movement into AGI. So I’m with you. I think the AI thing is quite interesting, and figuring out how it fits into the way that companies do business is a big part of how they’re likely to succeed financially moving forward.

Richard Cunningham: Well, you guys can already tell we’re off to a fast start. Matt Monson is on full display, and what a joy it is to kind of listen to you guys riff on this. You know, Matt, let’s back up for a second just to kind of remind everyone. So you are a public equities investor. You run a couple of really neat funds at Sovereign Capital, the Omega Fund and an ETF that maybe you can tell us more about later on. And you’re kind of distinct approach. But as we look at this disconnect between the run up of large cap stocks compared to small cap stocks, you guys have gotten into the AI conversation already. You know, how are you maybe responding to this as you kind of evaluate markets in your role specifically?

Matt Monson: Yeah, that’s a great question. So we actually just ran a bunch of data last week. So I’ve got a fresh off the top of my mind. You know, we’re all cap investors, which means that we are one third large cap, one third mid one third small caps. And so we don’t have a bias towards talking up anything specifically. And we can kind of move between them. But what I’ll bring to the conversation is that large caps right now are trading at a 33% premium to their 18 year pre-COVID forward earnings multiple. And so right now they’re trading at 20.7 times forward earnings. Small caps, however, are trading at a 20% discount to their historical multiple. And they’re only trading at 15 times forward earnings, say small caps, for reference, have typically traded at a small premium to where the large caps have traded. But right now, at a 25% discount, it’s a historically wide discount. And so let me remind folks of a few different things from 2000 to 2016. Small caps were up 410%. Mid-caps were up 370%, both of which significantly outperform large caps, which only rose 112% during that time period from 2000 to 2016. And then the tables turned so 2017 through present. Large caps are up 152% versus small up only 67 and mid up 92. So the recency bias inherent in all of us over the last seven years has shown that large caps have won. So I run into clients all the time who only want to own large caps, and they’re forgetting about that 16 year stretch before that, that small caps and mid-caps absolutely dramatically outperformed large caps. So I just find that to be interesting. And so we love being in the all cap space because we’re able to access all of them, not knowing when and to what degree one cap will turn and will be the leader for the next 16 years.

Richard Cunningham: Wow, that’s some good data. I worked for a premium investor that sought out specifically small cap and value premiums for a number of years prior to move it over to faith driven investor. And it was in the midst of that, you know, kind of unprecedented large cap outperformance and growth, outperformance of small in value. And so it was a tough couple of years for the firm, to say the least. But there is so much reference back to the historical basis for small cap and everything like that. So gentlemen, any closing comments. Kind of as we look at the public equities market and everything, as before, we get into kind of the interest rate conversation and go that way.

John Coleman: Well, I would say my overall comment and perhaps Matt hasn’t been surprised, but he just listed those numbers. You know, 2001 I think was through 2016 and then 2016 to present. And what continues to surprise me is just the incredible momentum and resiliency of US equity markets. I would have expected a dramatic slowdown in the current environment. I would have expected much more fear in the equity markets because of all the instability, inflation, etc. and yet US equities have just proven remarkably resilient in this environment. You know, that’s one of the things I continue to be curious about, because it several times over the last 3 or 4 years, I would have guessed that we were in for a prolonged pull down in markets because of Covid, which came back very quickly because of the fear of recession, because of rising interest rates and inflation. And yet US equities have continued to plow forward. And so I’m cautiously optimistic that they’ll continue to improve because of the fundamentals in the economy. And I know we’re going to get to some of those here in a moment. Matt mentioned those, but it’s been such a curiosity to me that they have been so resilient and we’ve had such a soft landing, despite all the moves of the last couple of years.

Richard Cunningham: Good comments, John. So maybe let’s do this before interest rates. I think this is key to go into as well. Matt, any thoughts on maybe how what you’re seeing play out in the public equities markets, how it’s affecting things in the venture and PE space, and then also kind of that big question of, you know, what is it going to take to open IPO markets back up now that equities kind of have improved stabilized. Yes there’s been the pullbacks. But let’s go venture in PE markets maybe IPO markets. Prior to us commenting on just the interest rate environment and things like inflation.

Matt Monson: Yeah that’s a wonderful question. I would say it depends. You know for some private equity and venture capital shops they own large cap names. And if you own large cap names that are now looking at comps in the marketplace that are trading north of 20 times earnings, you know, now you’re going to see elevated mark to markets in your funds. Fund performance is going to go up. Your opportunity to exit into the public markets, whether to a strategic or in an IPO will be a lot better. Now the other side of that coin is if you are a venture fund or a private equity fund that owns a smaller mid-cap, you’re not seeing those elevated valuation multiples. As I mentioned before, you know, you’ve got small cap forward earnings multiples at 15 times, which isn’t going to create the kind of juicy backdrop that you’re going to see in the large cap markets right now with regards to IPOs. You know, I think there’s a lot of talk right now that, hey, you know, the IPO market slow. What’s going on. You know I was looking at the historical data on it. And actually 200 IPOs a year is a fairly average number. And right now we’re running just below that. So back to the recency bias in 2020. You saw a record number of IPOs in the US for 80. And then in 2021 a record above and beyond that at 1035. There are no other years like that. In the last 20 years the average is really around 200. And so I think we’ve got a pretty healthy IPO market right now.

John Coleman: That is fascinating, Matt. I would not have guessed that that is recency bias. And I guess we all forget. We been in the markets for like 20 years. But it’s so easy to forget the. Prior eras. And Richard, what I would say I’m seeing in the private markets is fundraising is still a little bit slow in private markets, because people are still not getting distributions from their old private equity and venture holdings. I think selling positions has slowed a little bit. I do think the IPO markets, even if they’re more back in an historical average that represents such a slowdown from the prior era, from the prior several years, that you haven’t seen the liquidity mechanisms for some of these venture backed and private equity backed companies at the pace you would have seen them before, which slows down distributions. My perception is that the venture markets have bounced back in terms of valuations quite rapidly. You know, there was a dramatic pullback in venture valuations, which seems to be heating back up again, not at the 2021 levels, but we’re seeing pretty aggressive valuations in the early stage. Venture markets and growth equity markets again whereas private equity has stayed somewhat deliberate. And I think part of that is because of the high interest rates, which we’ll get into, you know, the private equity model, the LBO model is predicated on debt financing for many firms. And I think the inability to access cheap debt has kept valuations in those markets a bit more tame and has made them a little bit slower to inflate. That’s my perception right now. And so the private equity valuation market has come back but a bit more slowly. And I think that will only continue to increase as some of these IPOs do you pick up I mean Matt said we’re slightly below the historical average. You know, you’d like to see some liquidations, either sales in the private markets or IPOs of these private equity backed companies, or if interest rates start to come down, which I think would ignite, you know, the debt markets for IPOs in a pretty significant way.

Richard Cunningham: Right on. Well let’s get right into that. So interest rates what do we think in gentlemen 2024 2025. There’s been you know, maybe some tempering of expectations on what was supposed to be a rate cut heavy year by the fed. Matt, any thoughts on your end?

Matt Monson: Yeah. I mean, if we zoom out for just one moment, inflation has been a little stickier than people expected it to be. You know, running just a little north of 3%, depending on what data you want to look at. And because of that, the expectations for rate cuts have come down. You know, maybe it was going to be a handful earlier and now it’s going to be still there’s expectations for a little bit that may happen in the second half of the year. And as those expectations change it causes interest rate volatility. As there’s interest rate volatility it impacts cyclicals. It impacts financials. It impacts small caps. And so it really ripples through. You know I think a lot of this is just on the heels of the labor market strength that we were talking about earlier. You have so many small businesses that have open racks that they can’t fill and order magnitude. And that’s around 40% right now. And so even with rising rates that have crushed some of the consumer demand, you still aren’t seeing those job losses and an increase in in the unemployment rate the way that you maybe would have expected. And so just a remarkably strong labor market, I think, is really underpinning what we’re seeing in terms of the overall economic strength, which has led to, you know, that persistent inflation around, a little north of 3%.

John Coleman: You know, and to Matt’s point, I think inflation is almost always stickier than people think it will be. Right? I feel like historically, almost every time you think you’ve beaten inflation, it lingers a little bit longer than you think. And I do think there are still inflationary pressures on the economy, particularly the fiscal side of spending. You know, the United States government continues to pump liquidity into the economy, whether that’s student loan debt relief, etc.. The second observation I would make, though, because Matt has mentioned several times the historical ratios and how recency bias is throwing us off. I would say we’re suffering from a lot of recency bias around interest rates and inflation and employment as well. I had the privilege to one of my friends is now the president of the Ronald Reagan Foundation out on the West Coast, and I was touring the Reagan Library with him recently, and I saw some stats where they were trumpeting Ronald Reagan’s presidency, 1981 to 1989. And I’m not getting into the politics of this, but just listen to these stats. They were saying how impressive it was that during Reagan’s eight years, inflation fell from 12.4% to 4.6%, right, which is a little north of where we are today. I think unemployment fell from 7.4% to 5.2%, which is north of where we are today. And Matt, I remember when 5% was basically considered structural unemployment, right? The federal income tax rate, the top taxpayer rate was cut from 50% to 28%. So taxes were much higher. And the mortgage interest rate in the 80s dropped from 15.4% to 10.3%. And so if you actually look at the economic numbers today. The real aberration was the great financial crisis. Until two years ago, it was historic, global, low and negative interest rates, which drove just insane numbers around the economies of the world. And now we’re at a point that’s more like the historical averages with inflation. Unemployment’s sold that low. I think with interest rates, mortgage rates, etc.. And so I wonder if part of this soft landing is just that. Despite our recency bias, the actual real impacts of the economy, of the interest rates that we’re experiencing now are more in line with historical impacts than something really injurious, like the interest rates that were present in 1981, for example.

Richard Cunningham: Man, I don’t know that about Reagan’s presidency. I mean, kind of a fertile soil, if you will, to come down and and a lot of those numbers and metrics John. That’s interesting.

John Coleman: Yeah. I mean, it was wild to me to to see the numbers and see that, you know, even in 89, which I don’t even remember that. Well, mortgage rates being a 10.5%. You know, you think about what would happen today if we announced that mortgage rates were going to go up to ten and a half. I think we’re sitting at about eight right now, and it’s totally frozen. The mortgage markets, because of all these people locked in to kind of two and a half to 3.5% rates, but we’re actually living in a relatively normal interest rate environment right now. And it’s a little inflationary, but it’s not actually as inflationary as a lot of prior periods.

Richard Cunningham: Good historical precedent. Well, something else, gentlemen, that I think we need to just have a really sober awareness of and have our eyes on and, and I’d be curious to hear you guys thoughts on implications as it relates back to the markets as just time of conflict. We’ve seen what’s going on in Ukraine and Russia now for an extended period of time. There’s even, you know, recent updates to the conflict in the Middle East with Iran and Israel. You know, as you guys think about these international conflicts, what type of implications have there been on markets? Do you expect there to be on markets? Is that stuff priced in? Where are we at currently and what what kind of comments do you guys have there?

Matt Monson: That’s a good question. I think, you know, from my perspective right now, the direct implications are limited to the energy markets in terms of our funds. However, if this spirals into a broader conflict in the Middle East, you know, then we’re going to start to see a change in demand. And so one comment that one of my colleagues always uses is that threats to freedom are threats to growth. And we’re not seeing threats to freedom yet on our side, but we’re actively monitoring that.

John Coleman: Yeah. You know, apart from the obvious human cost. And I think we’ve all seen that and been praying for that over the last couple of years, whether that be Ukraine or, in Israel and Gaza. What’s been surprising to me is how markets are basically assuming these will stay contained, regional conflicts. I think we’ve seen brief periods where they assumed there was a possibility of a broader outbreak right at the beginning of the Ukraine invasion by Russia. I think we saw more market movements like this could break out. Right when Iran was sending missiles into Israel, there was a pullback, I think, because there was a fear of a broader war with Iran. But right now, my impression is the markets are assuming that these will stay regional conflicts. And especially with regards to the most recent activity in Israel, I think a part of that has been the surprising partnerships that have arisen during that. You know, I think if Iran had attacked Israel and there had been no regional support, I think the chances of all out war would have been higher. To see the Jordanians giving the Israelis airspace and the Saudis offering Israeli support was pretty surprising in the area. You know, traditionally, Iran has been an enemy of many of the Arab states in the region, and they’ve often viewed Iran as a much greater threat than Israel because it’s larger, it’s been more historically powerful. It’s obviously a different branch of Islam than the dominant Arab powers in the Middle East. But the fact that those Arab powers came to Israel’s support in the midst of the Iran bombardment, apart from the obvious conflict in Gaza, was a surprise. And, you know, I’m an amateur at this, but one of my observations is that might have muted some of the reaction, because even the Iranians probably weren’t expecting that kind of response from their Arab neighbors. And that probably caused them to be a little bit more cautious in the way they continue to react to the conflict. But right now, it seems like markets are just assuming these will stay regional. And like Matt said, unless there’s some indication that this breaks out more broadly or it turns into China invading Taiwan, or something of that nature, which could have real implications on broader U.S. markets. I don’t see this having a great impact if it doesn’t escape regional conflict.

Richard Cunningham: Well, gents, thank you. I know we’ve hit you covered a lot of ground, and we’re going to go in a fun direction here next because I want to kind of get into the Matt, you are such an admired leader and look to leader in the future of an investing space. And. So we’re going to get here into a second. We hear a lot in the news about corporate engagement, proxy voting and things like that. And so I want to go there as you kind of think about that. But before we do that, I want to provide you both just maybe a opportunity to tie a bow on summarize kind of as you look at the economy, markets, all of it, just maybe the Matt Monson John Coleman kind of state of the Union 30 seconds type. Just tie a bow on all of your thoughts as it relates to interest rates conflicts going on. AI disconnect between large caps and small caps, all of it for our listeners.

Matt Monson: Thanks, Richard. You know, one thing we didn’t touch on earlier that we’re watching closely and we think is really interesting, is that on our team, there’s been a lot of work that’s been done to look at the impact of shrinking M2 and the impact that we think that’s going to have on CPI. And so we think a lot of the M2 that’s come out of the system right now, you haven’t seen the full effect of that yet on CPI. And so we think that there’s actually going to be a reduction in inflation going forward based on actions that have already happened, because there’s typically been an 18 month lag. And so we think inflation is still heading in the right direction. You know, given some of my comments earlier around what we see on valuations, we don’t feel that the companies we own are stretched at all on valuation. And that’s just, you know, you’re going to hear that from other active managers as well, because we’re not passively deploying dollars into an index and you get what you get. And then we pick each one of our exposures, and we think there’s plenty of companies that have really good demand drivers for growth, fair or super attractive valuation. And so we’re really constructive on the public equity markets. And then just the greater backdrop of the US economy, we don’t see any big risks right now that we’re scared about, and certainly not the way that we’ve had things to talk about over the last 5 or 10 years.

John Coleman: Matt, how do you think about the upcoming election? That’s one of my instincts, is that markets will be a little bit muted as the US election plays out because of all these other risks in the economy, so it’s hard to see people getting too bullish or bearish absent some sort of shock globally, like we said, a big conflict or something like that. How do you think about the election in 2024 and its impact on markets right now?

Matt Monson: Yeah, when it comes to elections, usually there’s an unknown party, and a known party, and in some cases after a president’s been there for two terms, it’s two unknown parties. We have an interesting dynamic right now. We have two known parties. We had a former president, a sitting president, and we’re going to end up with one of them. And so I think that there’s less risk and less uncertainty heading into this election than there have been. And, you know, many, if not all previous elections.

Richard Cunningham: Interesting. Well, thank you both, gentlemen. So, Matt, let’s talk about kind of John, I’ve been in this season on the FDI podcast of talking about how to how can investors truly get in the game? How can we take more proactive steps forward and be faithful with what the Lord has called us to steward? And I think it should be helpful for listeners at home to hear a little bit about kind of what is your approach been, as you guys think about public equities, investors, corporate engagement, proxy voting, maybe provide a little bit of education there for what this can practically look like for your faith driven investor audience.

Matt Monson: Yeah, I love that question. You know, historically, public equity investors have just bought shares and been along for the ride. Worse yet, many investors don’t vote their own shares. They allow someone else to vote their shares for them. And you can guess what happens. That third party has their own set of values that they exercise when they vote your shares. So for faith driven investors, this is particularly problematic because if you own any ETF from a non faith driven ETF fund manager, you can almost be sure that your vote is being cast in conflict with biblical values. So in the world, we focus on how we give away our wealth and we focus on how we spend it. But most people don’t think about investing their wealth in line with their values. The faith driven investing industry is taking big leaps forward right now with corporate engagement, which means reaching out to companies and letting them know there’s another voice out there. Companies are responding with more neutral agendas as a result than some of the socially aggressive agendas that you maybe are hearing about in the headlines. And so there are multiple different paths to corporate engagement. And so I can outline them. I’m really I’m thrilled with what we’re seeing right now. So there’s a number of different firms out there that are reaching out to companies and moving their agenda in a really positive way. We have a little bit different approach at Sovereign Capital, so we’re engaging with the CEOs of publicly traded companies to bring them together around roundtables and to meet one another to learn best practices from one another. But we want to see them do is hear from their peers about what’s working well to enable human flourishing and what works really well to build better cultures, because we want to see those companies installing chaplaincy, installing employee benevolence funds, and really changing the face of what public companies look like.

Richard Cunningham: Man, that’s really encouraging. So for those at home listening, wondering, man, I just I feel so disconnected from my investments. There are practical steps you can take as a shareholder and how encouraging also that there are, you know, shareholders that are running ETFs and these other kind of fund structures who are engaging large company CEOs. And you heard Matt talking about it, bring them together to kind of be inspired and encouraged together. And Matt, you know, maybe help, you know, kind of orient people around the sovereigns public equities approach. You guys specifically invest in Christ following leaders of publicly traded companies, correct?

Matt Monson: Yeah, we do. If I sum it all up in just a few quick seconds, we believe that culture is the greatest competitive advantage in business and that if you invest in a company with a faith driven leader who’s building an exceptional culture to love and care for their people, that you’ll end up attracting and retaining some of the best talent in the marketplace, and that if you have a company with phenomenal talent, it looks like a sports team with all the best players, you should be able to outperform the competition. And so that’s the thesis behind what we do. We believe that there’s no trade off between culture and performance. And in fact, the greater the culture, the greater the performance.

Richard Cunningham: That’s awesome. Well, gentlemen, before we go to Matt and kind of have Matt share a little bit of a personal encouragement, I just what the Lord’s been teaching him in Scripture. Any closing thoughts, any any kind of saved rounds before we exit today’s episode.

John Coleman: I’m reminded, you know, we’re recording this the week of Passover, and it started yesterday, which is April 22nd as we’re recording this. And I am in a unique seat in that I have a number of family members who are Jewish and a lot of friends who are Jewish. And in the news right now in the United States, we’re seeing actually a rise in antisemitism across the country. And I think that’s caused me just to reflect on the importance of Judaism in Christianity and the important ties between those two groups, and just the important humanity of refusing to kind of discriminate against people on the basis of their race or religion or other things. And just a real heart for this. What should be an incredibly special time for Jewish people right now? But I know in the US at least, it’s been marked by a lot of fear. If you look at university campuses, etc. and so without weighing in on the conflict in the Middle East too much, it’s just been on my heart how tied Judaism and Christianity are, how important it is that the Jews in our country feel welcome and safe, and that during this Passover season that they feel celebrated and welcomed by those of us who are their brothers and sisters. So I know that’s not exactly a reflection from Scripture, Richard, but it’s been on my heart a little bit this week of Passover with some of the images that I’ve been seeing in the news, just, on university campuses and elsewhere.

Richard Cunningham: Thanks for sharing. John, appreciate that. Matt, what is Lord been kind of teaching you in Scripture lately.

Matt Monson: Yeah. There’s this verse. It’s so countercultural that I just want to bring to the forefront for everyone. It’s first Thessalonians 5:16 to 18. It’s what I call direction for living. It says, rejoice always, pray continually, give thanks in all circumstances, for this is God’s will for you in Christ Jesus. What would it be like if we all did that every day, every time something bad comes your way? If that was our response.

Richard Cunningham: Man, that’s so good, so good. Well folks, this has been a marks on the markets episode with Matt Monson of Sovereign Capital. Matt, what a joy to have you on. Thank you for sharing. You just kind of profound wisdom and insight on the capital markets. John, as always, what a joy to get to do this alongside you and folks. We will catch you next time.

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Chuck Welden, co-founder of Weldenfield, joins the Faith Driven Investor Podcast to discuss faith-driven investing and the impact of real estate on communities. 

Weldenfield is a real estate investment company that focuses on multifamily properties and deploys volunteers to live on-site and build relationships with residents. The goal is to create a social fabric and provide opportunities for gospel presentations. 

Chuck, Richard, and Luke dive into the importance of measuring key performance indicators (KPIs) to track the impact of work and ministry, as well as the importance of taking risks and managing expectations in early-stage investing.

Chuck also gives some guidance for believers looking to get in the game and steward their capital for the good of others and the glory of God. 

If you like this episode, please rate, follow, and share the show with others.

Conference Video Mentioned (Produced in partnership with Faith and Co.)

Episode Transcript

Richard Cunningham: What’s going on, everybody? Welcome to another episode of the Faith Driven Investor podcast. We are grateful to have you joining us as we record this. It is Monday, May 13th, 2024. This episode will actually drop on Monday the 20th, but whenever or wherever this faith driven investor podcast finds you. Thrilled to have you listening. My name is Richard Cunningham, joined by one of our faithful mainstays in Luke Roush, co-founder and managing partner of Sovereigns Capital. And Luke. We are in for a treat today, my friend, aren’t we?

Luke Roush: We are indeed. We’ve got one of our great friends who’s on today and someone who I’ve got a personal relationship with […] together with him, we’ve served on boards together. We participate in things like Christian Economic Forum together. And I really appreciate his generosity. And actually jumping on the podcast today, I was worried he might still be in mourning since Saban’s retirement from Alabama, but he’s come out of, mourning to, spend an hour with us, and we’re grateful for it.

Richard Cunningham: Yeah. Chuck Welden out of Birmingham, Alabama. Weldenfield the lion’s den. You know, Chuck, I had the privilege of joining the faith driven investor movement in May of 2021. So three years ago. And I’d be willing to bet that there hasn’t been a week that’s gone by since I’ve been involved with Faith Driven Investor, where the name Chuck Welden wasn’t mentioned. And I think it’s just because you’ve been blazing a trail, leading so much of this kind of conversation around what is faith driven investing, living it out yourself. And so we are overjoyed and thrilled to have you on the podcast, and you find us in this season, Chuck, where we are going back to folks who were featured on the 2024 Faith Driven Investor conference that aired in January. Whether they were a speaker, there was a video story on them, and Faith encoded this just masterful job telling the story of Welden Field, the real estate investment company that you helped run there in Birmingham. And so catches up, Chuck, who are you? What is Welden Field all about? For those that maybe didn’t get to see the conference feature, and we’re just so thrilled to have you on the pod today.

Chuck Welden: Well thank you. Chuck Welden from Birmingham, As you have already said, one wife four kids and ten grandkids. So that’s that’s the way you want to do that as far as ratios. Thanks for having me on the show. It’s pretty risky, you know, handing me a microphone. I assume you have some ability to turn me off or edit at the right time. And by the way, if you want to hear any Luke stories like, when he shipped his new […] to my office by accident, if that would be helpful, you know, to help set the stage. I’ll be glad to tell you the rest of the story sometime. You know, in Birmingham, we’re big fans of FDI. Eversource has a watch party every year, and we all go to it and love it. So thank you all for really investing in the whole country in the movement. I really appreciate what y’all do. I would like to start with 2 or 3 quick comments though. I like to say when I get a situation like this, one is, you know, if we’ve accomplished anything, it’s only because God’s been about it. We just basically, where’s God involved? And let’s go jump on his bandwagon. Number two, if you think you’ve been accomplished just because of all the folks that have invested in us. I mean, Birmingham is a backwater town, and yet we’ve had so many great people come here, invest in us, befriend us, teach us, mentor us. And it’s really advanced our thinking. We could not have done it without that. And third thing is, I know I’ll butcher whatever you say today, so I really prefer […] to watch the SPU video or the little five minute animated video that we made. They both do a great job explaining the fund and why we’re doing it and what we hope to accomplish. So if they sent Richard, we can refer people back to that. That’s probably the best thing we can do at the end of the day.

Richard Cunningham: Yeah, we absolutely can. And when people hear SPU, it’s Seattle Pacific University. They’re the crew behind Faith and Code that did this remarkable feature of Welden Field. But yeah Chuck hand it over back to you.

Chuck Welden: So maybe I’ll just give a little context for who. Weldenfield is basically my father, my uncle and another gentleman, Mr. Field, hence Weldenfield. They created the company back in 1977. And we’re active in property management in both multifamily. And then also we do development and redevelopment of hotels, multifamily, single family land and do good bit of private equity investing, including sovereigns, which has been a blessing for us as far as kind of a scale of our operations. I have about 850 employees, 14 states. We manage about 200 properties, about 20,000 units, and we’ve developed well over 12,000 units of multifamily, 3000 units of single family, you know, several hotels. So that doesn’t mean that we are smarter. That doesn’t mean that we make less mistakes. In fact, it probably tells you that we’ve made more mistakes because we’ve done all that. But we like to fail forward and try not to repeat the same mistake again, but we always assume it is. So that’s kind of a background of, you know, Weldenfield in a nutshell.

Luke Roush: The idea of actually failing forward and, learning from past mistakes. In the early days of sovereigns, we had something called RMD, which we, aggressively tried to avoid. And RMD stands for repetitive Mistake disorder. And, we suffered from RMD in the early days. But to your point, there’s opportunities to just process together as you bring new team members on. Sometimes they experience the same mistakes that you made before, and that really means that you are, in this case, me. I failed to appropriately train them on some of the mistakes that we had made. And so this idea of continuous learning and improvement, not just for existing staff, but new staff, you know, you’ve forgotten more than a lot of people will ever know about real estate Chuck. So maybe speak a little bit about that. Some of the things that you guys learned in the early days, that they really want to make sure that you’re avoiding in the current moment.

Chuck Welden: Yeah, we have lots of theories going into this, and it’s like, where’s the Tysons? That everybody’s got a plan until they get in the mouth. And so it’s true in real estate too, you know, we to about five properties of the fund in a variety of locations but for different demographics, all things that would help expand our knowledge base so that we could do a better job going forward. And we’ve learned some things. I mean, learned lots of things. For instance, we basically have 3 to 6 people volunteering ten hours a week that live on site. They get a rent stipend, and basically we provide a fishing pond. That’s kind of what we do. We give them a fishing pond. They want to love their neighbor, serve them, be involved in activities and social events that have a chance to lead to a gospel presentation. We call it connect, share, gather, train. That’s what we provide. We were we’re a fishing pond. And here’s some of the things that we learned quickly in the fishing pond. One is when you buy a property, you think you own it, but people who have lived there already, they own it. You’re visiting their house for the first year. After a year or two, it becomes your house. And so we have to be less aggressive the first year or two than we thought we could be. We thought we could be more aggressive, and really, we have to be more cautious and really go deep in those relationships. Number two, we started off thinking we’d only have 2 or 3 people per site. We realized quickly if somebody leaves or if two people leave, all of a sudden, all those relationships you’ve created, all those time spent, you have to start over again. If you have 3 to 6 people there, then or two people leaving doesn’t put you back to ground zero again. The third that we found out is ministry is messy. You got to be ready for anything to happen.

Richard Cunningham: That’s awesome. Chuck, maybe back up for a second and talk to us about how you kind of got to this investment thesis or methodology. So we’re really talking multifamily real estate investing here, buying apartment buildings. And then you’re talking about thoughtfully deploying people into these apartments. And you mentioned volunteers. So I’ll be curious about how that works as well from an economic standpoint with the fund and returns and what all that looks like. So thoughtfully deploying people into these communities to go spread the gospel and be on mission.

Chuck Welden: Let me tell about how we get here first, and I’ll come back to more details about what the program looks like.

Richard Cunningham: Yeah, give us some of the breakdown.

Chuck Welden: So basically, if you go back 20 years, I’ve been on about 20 missions trips, 12 countries, multiple times in my whole family or different members of my family. You know, one of those missions trips one day in Honduras of building another school building and, you know, wondering how many mistakes did I make today and what’s going to happen next Monday when we leave? Who’s in to come fix all the mistakes we made. And by the way, the four guys sitting on the hill watching me, I wonder how many of them would be working on this project if I wasn’t here volunteering today. So all of a sudden, Austin Hug here induced me to the concept of job maker versus job taker. So I set on a path, a journey to find out is there a way for me to use my business skills, my legal skills, my financial skills, real estate investment banking, those kind of things in a way to advance the gospel by being a blessing in the country instead of taking jobs or volunteering. By the way, vision trips are great. Volunteering is great. I don’t want anybody misinterpret me how important that is for family and for us as Christians, but in my case, I feel convicted. I need to do something a little bit different. And so we just covered business missions. So we then invest in 40 companies in about five continents, in about 15 countries and largely businesses. We knew nothing about honey bees, cattle, it, bookstores, dairy farms, insurance, whatever it was. And then one day, several of our investors, including Luke’s partner Henry and the McLeland Group and, Tom Phillips, 3 or 4 guys came to me and said, hey, why are you doing this? You’re on these boards of these companies around the world, your gallivanting around, why don’t you do your own real estate business? And by the way, [….] Ramones said, Chuck, I know how to make money. I don’t know how to give money away, but can I make money and be a blessing at the same time? And so I got challenged to see if we could figure out how to take real estate. And figure out a way to have impact investing within the real estate compounds. And so that’s really what the challenge was. So we started the fund raise about $20 million, about five properties. And that’s what we’ve been doing for four years now. It’s still only about 5 or 10% of our total business, but it’s a growing piece of our business. And think about all the different people out there that are actually activating this space in the ecosystem, including sovereigns and FDI, you’re a large part of this. But as a result of that, we’re getting more and more investors asking is, can we have a positive impact instead of a crazy impact?

Luke Roush: Maybe speak a little bit about. So one of the things we’ve talked about, Chuck, is kind of being known for what we’re for rather than what we’re against. And when you talk about resident impact on the folks that you have a chance to minister to maybe talk a little bit about what that looks like, you know, and how you’re for people who live in the apartment complexes that you guys have.

Chuck Welden: Yeah. If you think about it, in multifamily, the average person only knows three people in the whole community. I mean, it’s lonely and Covid only added to this, but it’s already there before Covid. Yeah. How about your own neighborhood? How many people in your own neighborhood do you really know that you’ve had supper with or similar sandwich? It’s just not true the way it was in the 60s and 70s. So what we realized is, if we can bring these 3 to 6 people to come live on the site, not parachute in, they live there. They’re part of the community. They create relationships. They earn their right to be heard because they’re working out at the gym. They offer to babysit for the mother who’s sick. They offer to bring food for the husband who’s out of it doesn’t have a job. We act as a social and service community, and then we do events and parties, and we create a social fabric. And that leads for an opportunity for these folks who agree to give us ten hours a week for the fact that we give them a rental reduction. They volunteer and use those ten hours, and we create a program of activities. They turn in. We’re very big into measuring things Luke. And, you know, KPIs are huge to you and to me. We measure 12 inputs all the way from prayer walks. How quick do they meet the resident when they move in? When do they have their first spiritual conversation? When do people come to events? How many people came to the events? How many events do we hold? We measure 12 to 15 things and we measure three outputs as well. We measure outputs of people returning to returning to faith, those coming to faith, and those attending Bible study or churches. And we trust God for the outputs. And, you know, we think we’re in control of the inputs. We’re really not even in control of the inputs, but we constantly evolve and change our inputs. If we don’t see outputs that match the effort we’re putting in. So it’s all about KPIs for us. We have a business plan and we have a spiritual plan, and they both have to be prioritized for what we’re doing.

Luke Roush: It’s good.

Richard Cunningham: Man I love that. Now you had a line that was you don’t treasure what you don’t measure. And then I believe you guys have hired for a position called a chief spiritual officer. Is that correct?

Chuck Welden: Yes. What do you think? That if you don’t have somebody responsible and that lives it every day, then it won’t get done? As one of the team members said, years ago, the spiritual was number five on my list. I had to set about fixing the roof leaked. We had to get the survey finished. I had to interview a manager, and so was number five. Back in the day was number one, but the next day started back at number five again. Because tyranny of the urgent always allow spiritual and important things or priorities, or spend time your kids or your wife to always be […]. It can be done them all. And these urgent things had to be done today that aren’t always the priority. So we said if we didn’t dedicate somebody, no one would really focus on it. In the end, we hired two guys, both 50% of their time. Calling priority is the chief spiritual architect. He’s designing the system or, designing the training, the recruiting methods, the discipleship modules, the evangelism training everybody. And Randy Wilson is the chief spiritual officer. He’s implementing those things they both can do either job or both are better at their respective jobs.

Richard Cunningham: That’s awesome. Yeah. And and Randy has a line in that video in the conference that I thought was so good where he said, if there is profit and no spiritual impact, we failed. If there is spiritual impact and no profit, we’ve also failed. It is finding kind of the tension and the lever to balance. And so talk about that a little bit as you approach investors. And I love how black and white you got in the video where you said, hey, in a traditional multifamily investment strategy, here’s kind of an expectation around the return profile. If you want to kind of ratchet up the spiritual integration and deploy these people into these communities, here’s where the returns might change and what that looks like. And so talk about that side of things and kind of how you guys have all process through that.

Chuck Welden: Sure.  And of course, anything I say today is subject to the fact that we’re in a transition point right now on returns in almost every industry, particularly real estate, have cap race, interest rates and insurance number. Traditionally, I would have told you that in our value add program, 15 to 18% internal rate return over a 3 to 5 year period, we decide in the fund. First of all, we would go longer. Instead of three five years, we would go 7 to 8 years because our investors wanted us to go deeper with our roots, so that when we leave one day, there’s a chance somebody’s still living there, somebody still living on the property. That still carries on the mission for some time period afterwards. So that’s one thing. Secondly, we sort to charge 200 basis points, which is basically 2% of the equity on an annual basis. So we told everybody your return would be approximately 2% less than what we’d get in a normal deal. So instead of 15 to 18, maybe 13 to 16. Now the numbers are being redefined right now because of there’s nothing trading right now. So we’re just use relative numbers for this conversation. And all these investors said, great, if we can get that return and have this kind of impact. We’ve had about 60 people either come to Christ or recommit their lives, most of them after 10 to 20 years. I mean, they have a church in ten years, maybe 20 years in some cases. So that’s what we did. And, they accepted those returns and we’ve accomplished those returns. So everybody seems to be happy so far.

Luke Roush: You know, here’s the way I kind of think about it, Chuck. And you and I have talked about this extensively before, but I kind of think of this journey that you’re on with the Weldenfield fund. It’s kind of being a first mover risk, right? Like you’re trying some new things. You’re going to make some errors of commission, in terms of what you try from a spiritual integration and both evangelism as well as discipleship perspective. But ultimately, you know, to the point that you were alluding to a moment ago, if you’ve got 5 to 7 years to demonstrate the results of this risk that you’re taking in terms of community member retention, right. The churn that you see or maybe see less of in your communities. I like to think that actually, buyers will appreciate some of the things that stem out of that. You’re not doing it for that reason, except, you know, that output is a byproduct of really caring for and loving people well, where they are. And so, you know, is there any idea that, hey, actually, at the end of the day, maybe the property is worth more than it would be if we hadn’t done this? And so what you give up along the way, you kind of get on the back end again, not the animating reason to do it, but it is kind of it’s interesting, you know, it seems concessionary in the early days and yet maybe not over time. Any thoughts or perspectives here? A few years in.

Chuck Welden: Yes, we have a lot of debates internally and with other investors like you and Tom Lowe particularly the challenge me the most in this area. You know, big picture wise, you know, apartment life, which is somebody we used on over a dozen properties over the years. They’ve done several studies to say it’s actually accretive, that the money you spend actually pays you back like 3 to 4 ratio. We decide just to be conservative in our underwriting. My father is a pretty hard man. And so I’ve been taught to under-promise and overdeliver. And so I really instinctively really in the end, the 2% that we’re spending in, by the way, it’s a maximum of 2%. Sometimes we spend less. And I’ll come back to that. We spend sometimes less than 2%. But I believe that in many cases. It’s costing us nothing because people are staying longer. We’re getting great reviews. We’re having people tell us that they moved in specifically because of friends of theirs that enjoyed that. We’re there are. So do you think you’re happier residents that stay longer? The turnover expense is less. They leave the apartment in better shape when they do leave, and they give you better ratings on their net. That’s really kind of like the perfect thing is, I guess there’s this guy 12 years ago. Let’s talk about being a good neighbor. So maybe it actually works. And so I do believe in the end that we’re not spending that whole 2%, maybe half and maybe none. I don’t know if it really will ever give you your performance. Certainly gives you a better in a Y a better T 90 trailing 90 for, you know, for purposes of selling on the back end. So certainly on the back end you may get a benefit also because you had lower expenses. But as you said, that’s not the reason we’re doing it. But I think at the end this is not costing anybody very much at all.

Luke Roush: That’s good, that’s good. And, you know, I think that there is this, this idea of trying new things. Right? Anytime we invest in an early stage company, they’re taking risk. Right. And there’s inherent risk in the process. But, you know, there’s an opportunity for believers who want to be more impactful in how they shepherd capital to take some of that risk. Right. And as you demonstrated and more people jump in, it’s just like the standard adoption curve. And I think your point about, you know, managing expectations, we always say expectations minus results equal satisfaction. And so the message is, you know, manage expectations. So I think it’s good.

Chuck Welden: But you maybe think it’s only I probably would like to touch on, you know, just like we one day had that aha moment that the […] kids had no shoes. As I was telling you, we invest in all these […] businesses that weren’t doing it with our own 850 employees and our own 20,000 units, we had that aha moment that our kids have no shoes. So I like to point out that we think we have 4 or 5 customers or clients or whatever you want to call it. We drew a, archery bulls out in the bulls, our residents. That’s our most important clientele that we believe we are called to minister to. But the next circle for us is our employees own site. Just because we’re Christian owned doesn’t mean that everybody that works for us is a believer. So we’ve had them also come talk to us about things because of what they saw, how we treat people. The other group is the construction crews are largely Hispanic Latino construction crews, and they come for 30 days to six months and often don’t go home very often. They once a month. So we’re now hiring Spanish speaking pastors to come in on a weekly basis and minister to those gentlemen. Soccer match, or come to the restaurant and have some beers and hang out and eat. So we realize that’s an opportunity we didn’t think about in the first three properties. So look at this example of mistakes we made or being an early adopter. We didn’t have a playbook to go back. But yet we’re realizing that. But the two people that we’re most excited about, maybe that is really interesting looking. Probably the same thing is the operator and the investors. We want all our investors to be so excited about when they get our spiritual report. They say, I can elevate, I can do this at my manufacturing plant, I can do this at my car dealership, I can do this at my bank, because at some point, demonstrating something is better than arguing. I mean, I don’t matter, arguing I love arguing, I’m a lawyer, but I don’t win any people with a lot of arguments. But I do want people to try new ideas when they see it and they experience and they taste it. So we think our investors and and secondly, other operators. We’ve had 15 other operators from around the country come to Birmingham. We did a person with eight of them about a month ago. We have two guys, including Nick Bonner, Luke, who, you know, he’s bringing a guy from California that he thinks he’s got lined up to think through how to do some of this. And they’re coming to Birmingham for two days just for us to invest in, them, we learn from them as well. I don’t I mean, we always learn from everybody comes, but he’s really coming to see what we’ve learned. So operators and investors are two other great people to have an influence on.

Richard Cunningham: Man, that’s good fun to hear about the multiplication. And it’s also gets back to Chuck that laser sharp focus you guys have on the KPIs. And you know, you treasure what you measure to use the word you use and focusing on those engagements. And it’s not just to feel good, hey, let’s write a check to the good guy so that it feels like we’re winning in our investment portfolio. But you’re actually coming back and saying, here’s how we are focusing on gospel progression and gospel impact inside of our community. So that’s deeply inspiring.

Chuck Welden: Enriching. Every company has a certain missional potential. And we think that if you don’t sit down your eyes, look at your balance sheet, your eyes look at your checkbook, your eyes, somebody evaluate your handicap on your game. You’re looking to see how many pounds I lifted this week. What’s my personal best this week? I’m talking to Luke, not me right now, but so everything else we keep score in life. But the one thing we don’t keep score on is this we say God’s and everything we do, we pray before meetings and those are all wonderful things. But for me, those are cop outs. I want to get my hands dirty and figure out every intersection point that exist, and try to capture every intersection point that we financially can capture. So that’s how we look at it.

Richard Cunningham: I love it, it’s motivating. Hey, there’s another thing I want to get into here, Chuck, that you’re also pretty passionate about. And that is this tension of raising rents and affordable housing and just the situation we’re in right now. It just, you know, cost of living in America is just growing, whether it be inflation, interest rates, you name it. But specifically on the rent side of things, how do you guys wade into those waters as a real estate owner and operator?

Chuck Welden: You know, I think the last time I cried was when I watched [….], so I don’t cry. I mean like once every 20 years, but I almost cried. And here’s the story. The first property was under contract. John Ray told me to go look at it in Pensacola. I walked in. There’s older gentleman. He’s paying rent with cash and managing 20,000 units. I knew what that meant is he can’t afford to pay his rent by the 10th. So as he gets checks from Social Security or wherever else, pensions, whatever, he’s getting his money, he’s paying weekly. And I said to myself, this is going to be an unintended consequence because we rehabbed the property and renovate it, raise the rents in order to give your investors the returns that they would like to have. You’re gonna raise rents 100 and $400 per unit per month, and some people will not be able to afford that change. And that was on Saturday. I came back on Monday, our weekly meeting. I said, guys. The homie, today’s about one topic. What are we going to do here? Because this man Joe won’t be there a year from now. And his story got worse. He got dementia, his wife get dementia. And our residents found his sister, who he had talked to in 20 years and moved him to Atlanta, where he finished his days. But I was so humbled by that situation. So we now try to look at the rent row and go talk to people and let them know what’s going up. In some ways, we should do this. We should not want people to leave. We should want everybody to stay as long as possible, and then they just get kicked out when they can’t pay the rent. We said, no, no, we’re going to talk to people and we’re gonna go help them. If they’re lower income, we’re going to help them get on the waiting list at the local housing authority, or we’re going to help identify some of the properties in town. But they’re so full right now and so that did not solve all the problems. So we took some of the money and used a little bit of a benevolence fund to help transition people a little bit. Basically, we took the investors moneys, and that was part of the reason we have that money is to serve our residents. And thirdly, Wilson has let them stay a month or two longer at the lower rent. But I would be lying. If I said we solved all the problems and then we did have people get hurt through this process. But there’s no somebody else gonna buy that property. And we came to the conclusion that we would just do the best we could and try to do more than anybody else would have done. But, Richard, there are consequences. There’s always unintended consequences.

Luke Roush: Have you thought Chuck where you own properties. And it may be just it’s a different market segment and it’s not what you guys do, but have you thought about going down market in a similar zip code so that you’ve got a place to transition people into? Or is that just kind of out of scope for what you told your investors you do with the fund?

Chuck Welden: Yeah. We purposely designed this first fund to be a medium fastball down the middle of the strike zone, where we knew that we had a chance to hit a double or triple and not strike out, because we know that if we fail, we don’t know anyone out there. There’s other people doing great stuff. Launch. Careful. There’s there’s 3 or 4 of the great funds out there. Sovereign’s has its own real estate foundation. Great guys out there, but largely is. We’ve met with everybody that we can find. We haven’t found many people doing very much like what we’re doing or like Launch or Sovereigns is doing. So we purposely decided to not take hardly any risks. Looked like that. But you have to hear the roots of it. Weldenfield is for the first 15 years was affordable housing. Section eight tax credits 202 for former home. So we have a heart for that. And our team has a heart for that. And so that is something we hope. But here’s what happens. Every time somebody brings us up to me I’ll say, okay, let’s talk about let me tell you what your returns are going to be. And they say, well, that’s not really the return I want. I wanted X. And I said, well, then you don’t want to do affordable because affordable does not make as much money. It’s a tougher market. You’re not going to make as much. But we’re still praying and hoping that some investors migrate into the affordable world so that we can do some things like that Luke. But these funds are just, you know, you see us being a mass properties. Really.

Richard Cunningham: Chuck, you said a line earlier that when you guys leave, you know what happened. There’s another tension to manage there in terms of Weldenfield comes in, buys the property, holds five, seven, ten years, whatever it might be. Cash flows in the interim and then ultimately sells to the next owner. What does that look like? Talk to us about the kind of the tension to manage as you leave a property.

Chuck Welden: Great question. And you’ve really hit on the two biggest tensions that we’ve discovered so far. I mean, there’s other business challenges, but those are two structural tensions in our mind as far as leaving. We know we’re leaving. Even Nasser, who built that big statue, it fell down eventually. Nothing lasts forever. And so what we’ve done is we’ve tried to bring in local churches and local ministries where we can. I mean, use example Bellevue Baptist have of Memphis, Tennessee is right down the street from one of our properties, and they never have 2 or 3 people from the church living on the property. And we’re encouraging that. We’re thinking that we have local in Huntsville. We had a guy that came up to us when he saw his prayer walking or saw Randy prayer walk and said, who are you? Why are you here? Explain what we’re doing. This guy goes out of the neighborhood and I walk my neighborhood in this apartment community, I think every week for like 15 years, hoping something would change, hoping that. And so we’re trying to find those persons of peace, those people who care about their neighborhood, churches that care about their neighborhood ministries, like No Place Left or the big life that care about their neighborhoods and their towns and get them to move in. With the idea that even when we leave, maybe they’ll stay 2 or 3 years and Weldenfield even talked about and like, we have a property we may be selling right now, and we’re talking about taking some of our part of the profits and trying to seed the property for another year or two. Because once somebody moves in there, they can keep doing all the activities. It’s not like the new company is going to kick them out. Now, they may not be as cooperative, and they may not let them hang the sand inside the elevator and people, things like that. But overall, once you’re a resident, you know people, you still get a chance to talk to them.

Luke Roush: So this whole idea of community, I think is really, really interesting, Chuck, because one of the things that I’ve never appreciated before, getting to know you and understanding the work that you do and others do is, you know, Class-A apartments. There is no community. People want to be able to go home, retreat into their apartment, and they’re kind of not looking to know anybody on the hall or anybody down the way. You know, class B, class C apartments are very different. A lot of folks that are hanging out and spending time in community with others, and they really are hungry for friendship. And so I think that’s something that you guys have really cute in on that, I think, is it’s indicative of a broader need that our society has to know and be known. And I love what you guys are doing there.

Chuck Welden: Yeah, I think you’re right. And I mean, there’s another verse on that one as well. harder for rich man to go through that eye of a needle than a camel. So the whole idea is that if you’re wealthy you don’t think you need anything. So we our residents have real problems. They have depression, they have drugs, they have broken marriages. And these are all opportunities for us. We had a lady whose husband was so mad at her. He wouldn’t go to her birth of a second child. He didn’t show up to the birth of his second child. So two of our team members, two girls from our team, went and stayed with her for 48 hours for a C-section delivery. She becomes a Christian. Her 12 year old becomes a Christian. I don’t know how I, you know, if I care about the guy, I don’t know where he is, but, I mean, these broken relationships. These are opportunities. And there’s same things exist in the eight properties. But we had it so much better. We can had things so much better.

Luke Roush: You talked about it, man. Being a good neighbor. Some guy 2000 years ago to use your line talked about that. Hey, Chuck, this is not a marks in the markets episode. Will be really brief here, but would be remiss while we have you and your just deep tenure in the real estate investing field not to get such some quick comments on. State of real estate market. I know we’re talking multifamily primarily today, but and I saw something in the news about a Fort Worth office building that sold for a 140,000,000 3 years ago, sold in an auction the other day just for 12 million, and say that it feels like there’s a little bit of doom and gloom, whether it be this interest rate environment, you name it. But any comments from you on kind of just the state of real estate investing and where things are?

Luke Roush: I’m not a math major, Richard, but that property in Fort Worth carry the one. Okay. Yeah. That’s a bad investment.

Richard Cunningham: That’s that’s not going to feed the kids.

Chuck Welden: When you take zeros off, it’s bad. We put zeros on. Yeah. Office has got a very tough road. I mean, office isn’t going away, but it’s going to totally be be a new bottom for it. We don’t know where that bottom is right now. Retail has come back a little bit. But the neighborhood, you know, not the big box but the neighborhood where you can eat and get services that’s becoming stabilized and actually growing right now, a little bit industrial, has been the darling along with multifamily for the last ten years. Industrial starting to slow down just a little bit. I was with some industrial guys all last two weeks and they talked about how things are slowing down the pre leasing. It’s really slow right now in particularly in even Dallas and Austin in Houston, multifamily reason we like multifamily is that people have to live somewhere. I mean, all these other things you still do in your house, are you at your house right now when we do this? Richard, are you at your house?

Richard Cunningham: I sure am.

Chuck Welden: Okay, so two out of three of us are at our houses, not me. So multifamily is here to stay? There’s a shortage of housing. 3 to 5 million. There’s a projected 45 million people living in apartments. That’s the size of Canada. So that’s not going to change anytime soon. I think there’s record delivery coming on, and 24 in the first half of 25. We’re looking at some new development opportunities, trying to deliver them in 2026 because that’s when there’ll be no deliveries coming right now. So multifamily is, I think it’s a good place to be right now. There is a correction being made. Properties are probably go down 10 to 30% of what they were worth at the peak. And some of those recover that very quickly over the next 2 or 3 years. Some won’t I would just say that whoever talks to you may find somebody that has some scars, make sure they have some scars, because so many of the guys who are going broke right now. I mean since 08. And they’ve never had a bad day in their life. They’ve never seen a day in which they didn’t make money and things went up in value. Yeah. That’s, that’s that’s is somebody who’s been around a while and have good track records. But I think multifamily will settle back in and probably be in the 13 to 17% returns over the short time period. Which is, you know, compared to 15 to 18 traditionally. There was a few years where was in the 30s, but that was just a that was a freak accident where everything happened just right. That was never sustainable. So that’s my projection of multifamily right now.

Luke Roush: That’s good, that’s good. And it’s relevant. And I think a lot of people are trying to figure out what to believe, both in terms of the underlying asset class itself and then also in terms of the rate environment, which is. Yeah. Any thoughts on that?

Chuck Welden: Yeah, interest rates are very tough and cab rates course are directly related to that. Ten year Treasury and B bonds really drive up cap rates because that’s kind of the alternatives. If you wanna look at a risk adjusted valuation that’s kind of how people compare. You know the ten year get down to 380 jump back to before 50 maybe. I think it’s in the four 40s. Now, the question is what would be long term? I think it would be in the 350 to 400. I don’t think it’ll stay above 400 forever, but I don’t see it going below 350 anytime soon. I mean, is I think that, and the idea of inflation, trying to get that down to 2%, I think is impossible. They should just say 3% or 4% and just go with it. There’s too much consequences to what they’re doing right now. You know that thinks cap rates. I think it’s a good time to be buying because I do think there’s a possibly some rate cap reduction. I think there’s a possibly some interest rate reduction. And insurance has already dropped $5, went from 800 dollars to 2000 is probably back down to 16 1700 now. Probably will continue to come down. And it’s just a great fear pendulum. All these guys left because they get burned. And then people made so much money that the guys who lost money were coming back because they realized, oh, these other guys are making the money that they lost. And so we call the greed fear pendulum. You can’t ever stay on one side, the other. You always run back and forth.

Luke Roush: Yeah, maybe just wrap us up, Chuck. We always like to finish with one question, which is, what is God been teaching you in and through his word? Recently. So, over to you on that.

Chuck Welden: Well, I’m in the Psalms right now, and I guess maybe the theme I see over and over again is faithfulness and obedience. There’s so many songs by David and the other writers that talk about somebody attacking them, or somebody persecuting them, or sickness or whatever these things are that they’re experiencing. But it seems like those who are obedient and faithful. As they said, I think it’s Psalm 73. And then I walked into the temple and it changed everything. I mean, walking to the temple and seeing God’s goodness and grace reminded them that they could be obedient despite the situation. And so it’s so hard sometimes to even I mean, our business is tough right now. It’s been tough for a year and a half to two years. But, I think every time we’ve had a downturn in the economy, I’ve been through four of them. The only thing that made me feel comfortable was just being obedient and faithful and treating the investors money, just like you would treat yours doesn’t mean you always win. You’re still gonna lose. But that’s how we sleep at night.

Richard Cunningham: Amen. Well, Chuck Weldon, just from the bottom of our hearts. Man, thank you so much. What a joy to have your tenure and your expertise involved in the faith driven investor ecosystem to have you today, specifically on the podcast. And so, friends, this has been the Faith Driven Investor podcast episode with Chuck Welden of Welden Field at a Birmingham, Alabama, key leader in the Birmingham Lion’s Den movement and just a longtime friend of the ecosystem. And so thank you all so much for listening. We will catch you next time.

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Brightlight’s Chief Investment Officer, Tim Macready, joins John Coleman and Richard Cunningham for a discussion on the state of faith-driven investing, the opportunities ahead, and the impact of faith values on investment portfolios. 

The three delve into the theology and purpose behind faith-driven investing, as well as the role of corporate engagement in influencing companies for good. 

The conversation also explores the growth and performance of the faith-driven investing market as well as key market trends. 

Tim also discusses his groundbreaking research about the effectiveness of and the opportunity for Faith Driven Investing around the world, providing listeners with practical insights that will help them get in the game.

Episode Transcript

Richard Cunningham: You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening.

Rusty Rueff: Hey everyone! All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies of securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham: What’s going on everyone? Welcome to another episode of the Faith Driven Investor podcast. Grateful to have you tuned in from wherever you’re getting this podcast. This is dropping on Monday, June 3rd. So for those of you in the Northern hemisphere, happy Summer. It is upon us in Austin, Texas. It’s scorching hot already. And with that in mind, we’ve got John Coleman in the podcast studio, Tim MacReady. And this is going to be a really fun episode. It’s a marks on the markets episode. But before we go there, I want to quickly plug some things going on in the FDI ministry and ecosystem, and that is Foundation courses. Kick off July 8th and October 14th. Those are kind of the final two cohorts for this year, and we take great joy and pride in producing content like the FDI podcast within the faith driven investor ecosystem. But as with all things inside the body of Christ, it is better and community and alongside brothers and sisters. And so we’ll just heavily encourage you if you’re listening to the podcast and you have yet to go through an FDI Foundation course, this is the way to experience kind of the beginning of community within the FDI ecosystem. And once again, July 8th and October 14th, something really fun that we’re also doing, taking place on June 21st and 22nd, as well as September 13th and 14th, is kind of this weekend workshop for spouses and couples where you can experience the FDI Foundation course in a weekend. So maybe you as a spouse have gone through it and you’d love to take your husband or wife through the course. This could be a really neat opportunity to kind of experience faith driven investing community in a retreat style setting. And then all of this. If you have any questions faith driven investor.org, go hover over community or email Samantha Couch or Ben McLennan from our team. They are both Sam or Samantha at Faith driven investor.org and Ben at Faith Driven Investor.org. So I know that’s an abnormal kind of plug here before we start a podcast, but just know that we are deeply proud of these community opportunities and they are deeply meaningful experiences. Tim MacReady, John Coleman have both participated, helped lead, have been featured in all types of community opportunities that we’ve offered there with me in the podcast studio today. John Coleman, how is your Memorial Day?

John Coleman: Man, it was great. And just let me follow up with that plug. I have heard so much awesome feedback on the FDI groups on the community. So you guys are building the content is really good. I’ve obviously experienced it myself, but I keep hearing from people how impactful it’s been and so I hope everybody listening will really consider if they haven’t done an FDI group, if they’re considering a weekend community. I think this new couple’s content is really cool, actually. Jackie and I are thinking about going through it soon. I know Brooke and Luke, we’re a big part of that as well. So just great work to the faith driven investor team there because you guys are piecing together something incredibly meaningful.

Richard Cunningham: Thank you, John, for that. All right, John, I mean, he’s got to be one of my favorite people. If we were to like power rank folks involved in the FDI ecosystem, Tim is easily my top Australian voice, I’ll tell you that much. But led $1 billion Australian pension fund. So Tim, please correct me if I say anything wrong. Christian super. Recently in 2022 relocated his family to the States. He’s in Colorado. He’s running bright light, which is just an amazing research institution and just financial services organization that is going across kind of this broader FDI ecosystem and providing institutional level research, diligence, scoping out the kind of breadth and depth of the FDI ecosystem. And it’s just a really key and important leg of the stool as it relates to helping get people in the game of faith driven investing. In our January 2024 FDI conference, Tim was a featured speaker. He gave all types of data on just what is going on in the FDI ecosystem, the growth we’ve seen just in the last few years alone, such a key voice. You’ll always see him speaking at things like Kingdom Advisors. So Tim, what a joy to have you on the podcast. And let’s start with you kind of filling in any of the gaps of my kind of career progression for you there, because your story is just too interesting not to highlight.

Tim MacReady: Richard. John, really good to be with you and with our audience today. Yeah. So to kind of dial a little further back, even I grew up on the mission field. Parents were missionaries in Papua New Guinea. I returned to Australia for college at 17 and studied actuarial science with the goal of kind of getting into financial services and seeing what was what opened through God’s kind of moving there ends up working in corporate pensions consulting for nearly five years, kind of building skills. And then, as you mentioned, moved to Christian super, pension fund, superannuation is Australian for pension and spent 15 years there really exploring. What does it mean in the context of a pension fund where you’re stewarding assets on behalf of 30,000 Australians? What does it mean to be faithful? What does it mean to think about not just retirement from a biblical perspective, but also investing from a biblical perspective? And we really wrestle through what strategies can we use to develop this faith based investing capability? Can we screen out of the portfolio those companies that are misaligned to. Our values and to human flourishing. Can we invest more in those companies that are leading towards flourishing? Can we exercise our influence as shareholders? Can we even invest in faith driven entrepreneurs and faith driven leaders in the marketplace? And as I said, do that for 15 years. Out of that team of Christian Super, we formed Bright Light, which is where I work today. We’ve got people across Australia, New Zealand and myself here in the US, really at this intersection of how do we marry faith values and investment portfolios in a way that is excellent and has integrity to our investment objectives and our faith?

John Coleman: Well, if I could just pump up Tim a little bit more because you could miss it in that description, which was beautiful. He was really one of the first movers in the institutional marketplace, in faith driven investing, particularly from a positive screening perspective. Tim, I think what you all did at Christian Super more than a decade ago starting to get into this, I know, in full transparency for the audience. There were early investors with sovereigns, but from my point of view, kind of along with the McLellan Foundation, maybe a couple of others, Christian Super led the way for what the evolution of faith driven investing could look like, covering both negative and positive screening, getting beyond negative screening, trying to support managers who are doing that. And now I’m just so encouraged by what you all are doing in the context of bright light as well, carrying on and evolving that legacy further. And I think with your background also adding a lot of rigor to producing frameworks and data regarding faith driven investing that can help solidify in institutionalize the industry in really meaningful ways. So some of our audience might not be familiar with that background, but Tim has been a leader here for more than a decade, as he articulated. And I think his work at Christian Super and now Bright Light has been some of the most important in the industry.

Richard Cunningham: Tim we get to get on calls often. So I’m going a little off script here, but you’re kind of theology for the why behind faith driven investing I think is so captivating. And so as we get into bright light in the research, you’re doing, some of that conference talk that you gave, I think it would be helpful to, to start with some of the why? Because I think some people still are kind of like, what’s the big deal? Why faith driven investing? I don’t kind of find it compelling yet. And we want this to be something that’s never prescriptive or presumptuous. We want the Lord to lead here. But your kind of articulation of the theology and you’re kind of personal. What I thought has always been super meaningful.

Tim MacReady: Yeah. I mean, I love getting into this, Richard. I think when we look at the calling and vocation that God gives us as believers, there’s a general calling to faithfulness, to obedience, to living out our faith in every sphere of life. And so for those of us working in the investment field or in finance, I think it’s really important to understand and to think through, well, what is it? What is the redemptive purpose? What is the contribution to God’s redemptive plan for the world that investing or finance has? And for me, it boils down to this. Investing in general as an activity takes capital from places where it would be unproductive, to places where it can be used productively for profit and for human flourishing to produce goods and services that promote human flourishing. And I think that’s a vision of investing that we could get on board with, even without a deep understanding of the gospel, the idea that God has an overall redemptive plan for the world that is about flourishing in about relationships with him and with each other. And so then as a believer, how do we live that out? Well, we look for places where investing can be more redemptive, can lead to more of those goods and services that create flourishing, and can move away from some of those goods and services that don’t create flourishing. Companies do a lot of good. They create jobs. They create products, they create services. They create marketplaces where people can interact. These are all good things. As Christians, as believers, my theology of investing is how do we do more of that? How do we support companies that are doing more of that? And so that looks like how do we support faith driven entrepreneurs, faith driven investors specifically, but also how do we get alongside those broader parts of the market that are actually also about flourishing, even if not necessarily specifically faith oriented in their approach?

John Coleman: Well, in Tim, I think what you’ve articulated there, the flourishing thing can sound a little bit like motherhood and apple pie, to use a US expression, where everybody says, of course, of course, that’s what we want. But I think it’s, you know, one of my side gigs is I write a little bit primarily for Harvard Business Review, and the big topic I write about is purpose, meaning human flourishing. And the situation we face in the world right now is reasonably bleak, actually, even as the world is becoming more prosperous, safer people’s perception of their own flourishing of things like loneliness, of disengagement, of dissatisfaction, of purposelessness is growing right despite that prosperity. And so it’s not a given even within capitalism, which I think we think it’s the right system, right? It unleashes human potential. It’s innovative. But even within that system, it’s so possible for people to not flourish, to feel disengaged, to feel like their work doesn’t have meaning. And if you look at all the stats, I think globally only around 15% of people feel engaged at work right now, depending on the country. There’s no country I’ve seen where a majority of people feel like work is a meaningful source of purpose in their life. I think the highest I’ve seen is Italy in the 40 something percent, in South Korea at 6%. Right. And so there is so much work for people who believe in human flourishing, who want people to feel purpose, who want people to leave work better than they came, to create work environments like that, to create redemptive products and services. And so I think it’s easy to gloss over that idea of redemptive products and services, flourishing workplaces. But from my point of view, it’s never been more important than it is today. And the disconnect has never been greater. In meeting our task as investors and entrepreneurs is a real challenging and timely one.

Richard Cunningham: Yeah, it’s well said from both of you. All right, John, when we had Matt Monson on, you used the phrase towering intellect. And so I’m going to repeat that phrase here for Tim MacReady because buckle up folks, as you’re listening, we’re about to get into some just awesome data. So Tim, you do a lot of research, at bright light on a macro level of kind of the growth of the FDI ecosystem, but then also in just individual manager diligence and looking at product offerings and funds out there and understanding, hey, is this a good fit for particular advisors and their clientele or institutions? And you serve in a number of roles at Bright Light, but I just kind of want to hand the floor over you and say, hey, you’ve done so much study on the kind of the ecosystem and the faith driven investing movement. Where should we start this conversation? And then I know we’re going to get into some numbers. So it’s going to be fun to hear.

Tim MacReady: Yes thanks, Richard. So to kind of start with what’s our role in the ecosystem for groups like us that kind of support a lot of market participants? It can be kind of tough to pin where exactly we fall. So our job is to help the people who want to invest in line with their values, to find the right investments to make. If you imagine, and I know there’s many metaphors flying around, but if you imagine capital markets as systems of plumbing that funnel capital from one place to another, the way that pipes funnel water from one place to another in the faith driven ecosystem, many of those pipes are blocked or still being built. And our job with a plumber who comes along to build the pipes and to unblock the pipes. And so we support investment advisers, family offices, charitable foundations, donor advised funds and all kinds of other investors who want to align their values in their portfolio. And so, as you’ve said, that means we research the market broadly, but we also research individual strategies and products across both the public and private markets in the faith driven investment ecosystem. And then we use that research to help construct diversified portfolio, whether that’s tailored for individual clients or model portfolios that advisors can use across multiple clients that integrate these faith based strategies across both public and private markets. And this necessitates a lot of research. We research because we want to bring confidence, transparency and excellence to this space of faith driven investing. And we hope that our research does that in the macro sense. When we do research into the state of the faith based investing market. It shows the depth of the market. It shows that this is a real market with over $100 billion invested in it. It demonstrates the performance of the market. It shows that there are strategies that have track records of delivering good performance, and it just helps people to understand what it is that they’re investing in. So that’s the confidence side. It also brings transparency by publishing research. We’re able to show that there are differences between faith based strategies and their broader market counterparts. We can show that when faith based funds screen companies that are not aligned to Christian values or not supporting flourishing when portfolios are different, we can show that these organizations exercise their rights as shareholders differently. We can show that they are finding positive opportunities to invest in companies doing good, or to use their influence for good. Transparency helps us to understand why faith driven strategies are different in a way that we hope inspires and helps consumers to make informed decisions in line with their values. And then on the excellence side of things, we’re able to highlight trends. We’re able to find gaps in the market. As many products as there are, there are still some parts of the market where there’s only a few products on the shelves, or the shelves are looking a bit empty, and we’re able to push the ecosystem and specifically the managers within the ecosystem towards excellence. Five years ago, for example, best practice largely looked like just screening out sin stocks in certain industries. Now, screening can be much more nuanced. We’ve got corporate advocacy and engagement strategies being more widely adopted. We’re seeing the beginnings of integrating more positive impact criteria into portfolio design. All of those point towards excellence. And then we can also identify those products and strategies where we think improvement is needed in order to kind of lift to that excellence level. And then when we get to researching individual strategies, it’s the same thing. It’s the confidence, the transparency and excellence to help people to allocate. And we can go into some more detail in that as we continue our conversation.

John Coleman: Tim, would you say a little bit more about the corporate engagement side in particular? You know, we just had two wonderful Catholic investors on the podcast. We had Tony Minopoli from the Knights of Columbus and Andrew Abela from Catholic University, both of whom are helping the Catholic Church think through what this looks like. And I do think, as you’ve articulated in public markets, there’s this pushing a negative screening is kind of table stakes for most now. I think almost everyone believes that that has a role at some level. Some people screen out 20 stocks, some people screen out 800. You know, that’s a choice of preference. I think the next step, which is becoming easier and easier, especially through things like direct indexing, is corporate engagement and proxy voting. This idea that if you hold a stock, you should take back your voice and use your voice to potentially influence the companies. And then, of course, I think as you articulated, that third step, which is the hardest, but also perhaps the most worthwhile, is this positive screening or thematic engagement, like how do we invest specifically in things we’re supportive of, corporate engagement in particular such a hot topic right now? Would you say more about what that looks like from a Christian perspective? I know you’re doing some of that. Like how does that manifest and why is it important?

Tim MacReady: So we use corporate engagement to speak to a wide range of strategies, all designed around the central goal of influencing the companies that we’re invested in for good, in alignment with our values. We’re at the point now where I think table stakes for corporate engagement is proxy voting it its shareholders. When we own shares in companies, we have rights to vote those. Many times the company, at their annual general meeting will present all the standard things. Approve the auditor. Approve the remuneration report, elects new directors all of the nuts and bolts that make a company work at an operational level. But increasingly over the last five seven years, companies are either bringing themselves or having brought into the discussion at these annual general meetings resolutions on a whole range of other things. It might be resolutions to investigate supply chain transparency risks for a company that’s sourcing from offshore. It might be resolutions to explore what the implications of paying a living wage or a certain minimum wage would be to low income employees. And many of these resolutions actually speak in large part to the values of the company. Yes, they’re about the long term financial success of the company, but many times they’re speaking to the values that shareholders expect a company to live out in the way that it conducts its operations. And so those kinds of resolutions, we think it’s really important for faith based firms who are managing assets to understand and to vote on sometimes something that at first blush looks wonderful, like eliminate all child labor from a supply chain can actually be very complex for a company to do, and we might prefer to see more nuanced approaches that, say, understand the risks of child labor in a supply chain, and take steps to support communities who are kind of forced into that situation. But even just exercising votes, there is, we think, table stakes now for managers working in this space. And five years ago, that wasn’t true. Five years ago, most managers just outsourced their proxy voting to a central firm who would just vote them in whatever way they thought. But then we take a step further. So those conversations around supply chain, around child labor, around politicization, around what communities are served, around creating flourishing spaces for employees, invitations to a broader dialog with a company on those issues. And we think that the best strategies today, and we do this with some of the clients that we support on their behalf, actually involve sitting down with companies and saying, hey, we’re believers. We represent a broad pool of assets that comes from people who believe in the dignity of everyone made in God’s image, who want to see flourishing, who want to see your company profit and succeed. We’d like to have a conversation with you about these issues, about how trafficking risks might play into your operations, or how risks of certain localized environmental issues where they might be polluting local rivers and causing problems for water supplies. All of these things, we think, are invitations to speak to companies and to demonstrate that we think as Christians we care about their long term profitability, but we also care about how they do their business and the people that they serve.

John Coleman: Well, one thing that I think is unique about what you’re talking about, a lot of times corporate engagement has been portrayed in public and often as executed as negative, like we’re lobbying against something right now. There’s a big example where a couple of big pension funds are fighting Exxon on something and trying to get rid of the entire board, for example. What we found is sovereigns. And I think what you’re describing is often the leaders of these companies want to do the right thing. Often they actually want to do things that help people to flourish. Often they’re people of faith, right, who agree with some of those principles, but they need a voice to articulate those amongst their shareholders to try and prioritize them. And so this isn’t just negative. It’s not just beating companies up. Often. It’s working with management teams to help them more fully express the values they already hold. And in that way, I think corporate engagement can be more than just the kind of beating up a company, although that might be necessary sometimes. It can also be encouraging them to do the right thing, helping them to understand where something is happening that they might not have seen, or being a shareholder voice for something the leader would like to do, so that it’s easier to have that discussion with their board.

Tim MacReady: Absolutely, John. I think corporate engagement brings both the prophetic voice and the priestly voice, the prophetic voice that says, this is wrong. As believers, we believe in the dignity of all people. And this direction that you’re going company is wrong. But often it also needs to be the priestly voice that gets alongside internal resources of the company and gives them the support to advocate internally on these kinds of issues. And so I think both are important.

Richard Cunningham: Man, it’s good to hear you guys riff on Tim. You mentioned it in your earlier comments about kind of this idea of just unknowingly, almost kind of just lobbying away your corporate engagement. And a lot of times it’s been institutional shareholder […..] are the two main kind of proxy voting in corporate engagement. You know, almost service providers, if you will. And Jerry Boyer did some research recently just looking at the way those organizations are voting. And you kind of wonder, hey, how did so much money so rapidly plow into ESG and spaces like that? And it’s really it’s because these centralized locations. Tim, you were talking about that. Many large institutions just kind of wield their influence, if you will, just because it’s what everyone else is doing. They vote the rights, if you will. And so that’s kind of how we get into situations where there’s a lot of just homogenous, similar behavior among these kind of mega corporations, if you will. All right. Well, cool to hear you guys hit on that topic, Tim. Confidence, transparency, excellence. In terms of the reasoning and the rationale behind a lot of your research on the confidence piece, a lot of it is showing the depth and breadth of the market and the broader FDI space. And this gets back to that conference talk that you gave in January. Any comments there? And just kind of insight on where we are on a macro level within the faith driven investing landscape?

Tim MacReady: Yeah, we are gearing up to publish our second annual research report into the state of play in public markets for faith based investing and faith driven investing. This year, we’ve gone past $100 billion in faith based strategies across mutual funds and ETFs and [….] funds. Last year, I think we were at about $90 billion. So there’s been good growth in the market over the last 12 months. There are 164 mutual funds and ETFs, and that’s not even accounting for all the separately managed accounts, strategies and model strategies that people can have access to as well. With 25 managers working directly in the faith based investing space, including 20 managers working solely in faith based investing. So every product that they have is integrating faith alignment strategies in some way. And so there’s this depth of products available. But also like a $100 billion market is a big market. We might look at that relative to the size of the asset management market overall in the tens, if not hundreds of trillions of dollars and think it’s just a drop in the bucket. And it is. But $100 billion is a big number, and that’s a lot of assets that are being thoughtful about the way that they’re stewarded for values as well as for growth. So we look at the performance of the market as we drove deep this year. We wanted to look at whether performance that was coming out of faith driven strategies is consistent with what we would expect and with what we see in the broader market. And the answer is that it is we divided the universe up into passive funds and active funds, passive funds that just invest essentially in an index or a benchmark, and active products that are seeking to add value. And over the last 12 months, we found that 38% of the active funds outperformed their benchmark. That is better than the broader market, where 36% of funds outperformed their benchmark last year in the index or passive fund space. We found that performance is very closely aligned to the indexes that once you accounted for fees, essentially those funds perform pretty much exactly as you would expect them to. Now there’s a range of quality in that. There are strategies that seem to be consistently outperforming. There are strategies that seem to be consistently underperforming, and there are many products that seem to cluster around what we would expect their performance to be based on the benchmarks for the kinds of assets that they’re investing in. But overall, as I said, we just found that performance is consistent with what we’re seeing in the broader market. We also have done a deeper dive this year into fees and costs, where we have found that fees are expenses of the mutual funds and ETFs are slightly higher than what we see in comparable products in the broader market landscape. You can get index products. The average index fee at the moment in the broad market is five basis points, or 0.0 5%. The average fee in faith based index products is around about 0.25% up our products available from as little as nine basis points all the way through to about 44 basis points. And similarly for active products, we found about a 15 basis point fee increase for face products over their non faith products. But crucially, we also found that the average fees in faith based products are falling faster than fees in the rest of the industry. And so as more assets flow to faith based investing, we’re starting to see those fees expenses converge with the broader market. And it’s very common as new products and strategies are developed for fees to start higher and then drop down. So overall, the big message that we’re finding from our research is that this is a credible movement with a significant amount of capital invested and performance that aligns with the kinds of performance that we would expect in the kinds of performance we would get if we didn’t adopt faith based investing strategies.

Richard Cunningham: Yeah. That’s encouraging. And another one of the things you said, too, is that as the credibility grows, the assets grow. It seems like the fees are falling and the ability to access is getting easier, as that number has jumped to that 164. And that’s only mutual fund and ETFs. I think you mentioned 25 managers and 20 of which are working solely in the faith based space. Tim. So this is public market side. You do a lot also on the private market side, specifically on manager diligence and individual, you know, fund diligence, probably harder to capture all of the macro data like it’s, you know, available in the public markets. But what are you seeing there? As you look across kind of the private markets.

Tim MacReady: Yeah. And Richard, let me speak to why we think that the micro-level research is important as well. So it’s one thing for me to get up and say, hey, this is a big market. There’s lots of products available, but that doesn’t necessarily help people to know which products to buy. As with anything in investing, putting the wrong portfolio building block into the wrong part of the portfolio, even if it performs as it’s expected, can actually lead to investment outcomes that are not aligned with a client’s objectives or with an investor’s goals. And so one of the things that’s challenging about allocating to faith based strategies is clients may not know how to talk to advisors about all the different options they have. 164 product is an awful lot of products. And as you’ve said, it doesn’t even take into account all the separately managed account strategies or all the strategies in the private markets. Advisors might not be able to access all the products. And so it’s important not just to understand the broad landscape, but to understand the investment credentials and the faith integration credentials of a product, to know whether it’s right for you or for a client that you’re working with. Even with something as basic as screening, there are so many different approaches to what is screened and how screening is applied. Do we just take the traditional sin stocks, or do we also try and hit on some of these much more qualitative and subjective issues, like child labor or trafficking or harassment? And so we think it’s just as important when you’re building a faith based portfolio to understand the role of each building block in a portfolio. We would love to know. We would love to be able to confidently say which strategies will outperform next year, in which ones won’t, but because we don’t, each strategy has to play a role in a diversified portfolio. Some will perform better if markets do well, some will perform better if markets struggle. And then you need the expertise to package these different products together into a coherent strategy that performs the way that the client expects us to. And so that’s why across both public and private markets, we research and evaluate strategies across the areas that we think matter to faith based investors, both their investment merits but also their faith integration merits. That is particularly important in the private markets. It’s much harder to get data. We don’t have a concrete scale where we know exactly how many assets are invested. We know it’s into the billions of dollars. We just don’t know how many billions of dollars. We saw about 50 strategies launched last year, specifically in the faith driven space, whether that’s groups investing in faith driven entrepreneurs, whether it’s groups investing in multifamily housing and putting chaplains in to support community development and gospel witness opportunities, whether it’s in the private credit space where we see groups lending to faith driven and impact driven entrepreneurs, even in some of the more esoteric spaces cooperatives, employee ownership. We’ve just seen a lot of products launched in the last year. And so we know, as I said, roughly 50 products launched last year. The highest category was private equity and venture capital with probably 30 or so products, real assets. So multifamily housing, office, etc. was probably about ten strategies and about ten strategies in private credit and other types of approaches. We’re going deeper on trying to understand the scale of the market and map the performance. It’s going to take us a little longer than it did for the public markets, because the data is not so readily available and it’s often in inconsistent formats. But that’s part of our job, is to translate that complex data into something that consumers can understand. As we look at the private markets, here’s what we do see. We see increasing size. We’re seeing many managers starting to come back with fund three fund four at larger sizes than what they raised in earlier funds. We’re seeing scalable opportunities, particularly in the real estate space, and we’re seeing an increased what we would describe as institutional quality, what you might also call kind of professionalism and excellence across the board, just lifting levels as the movement grows and as the amount of capital invested increases.

John Coleman: Well, I think one of the things you highlighted that’s really important from our perspective is thinking about both the spiritual integration or impact, as well as the financial acumen or the investment quality. I think one of the things that’s plagued the industry a bit in the past is the gray lines in faith driven investing between concessionary investing and market return investing, and sometimes people had an impact thesis. They would kind of pitch it as market return, but it was really concessionary in some respect. And I think the future is look, there is a role for concessionary investing. Not everything has to be at market. I think that spectrum between philanthropy and market returns is broad, and there’s actually room along every part of that spectrum, including pure philanthropy, but getting much clearer about which strategies are concessionary for their asset classes, which are market return is incredibly important. And, you know, one of the things that we’ve embraced is in a variety of ways. There are theses in faith driven investing and spiritually integrated investing that can lead to market outperformance. The thesis we embrace as a firm is that faith aligned cultures can outperform the cultures that promote human flourishing, and a love of God and love of neighbor can beat their competition in the marketplace. And hopefully that leads to investment performance. But I think the data in the institutionalization of the industry to be clearer about those distinctions, about which strategies fall, where will only help the industry move forward, because then people will have clarity what they’re measuring from an investment performance sense against mainstream offerings versus what they’re doing with some sort of concessionary impact thesis, right? Whether that be through philanthropic dollars or whether that be, you know, through their private investing dollars, but acknowledging, you know, that they’re intentionally seeing something below market for the risk that they’re taking something. We see a lot. For example, Tim, on the credit side, when you talk about things like Micro-lending super valid strategy but often has concessionary elements to it, right. And I think people having a good understanding of that framework in which products fall and what parts of that spectrum is only good for the industry as it moves forward.

Tim MacReady: Absolutely, John, it speaks to this transparency piece of being able to say, what do we expect a particular strategy or products to deliver? And then we can measure whether the excellence flowed out of that is we set realistic objectives and setting realistic objectives, not just in the return side, but also in the impact side. One of the things that we have seen starting to happen in the industry, in faith based investing, is people with a lot of good intentions, but not necessarily a clear plan on how they’re going to demonstrate that they achieved the impact that they set out to achieve, whether it’s spiritual impact, social impact, creation care impact. And so one of the big areas of focus for us as we research products and strategies at the moment is, yes, continuing to push them on investment excellence, but really pushing deep on, okay, you’re making these claims about if we invest in faith driven entrepreneurs, this will happen. Or if we put chaplains in multifamily apartment buildings, this will happen. Where’s your evidence? What are you going to measure? What are you going to report back? How are we going to be able to demonstrate that this faith driven capital is delivering the kind of outcomes that are expected and with financial performance? I don’t want to say that’s easy, but it’s relatively straightforward. We know what return we got at the end of the day with the impact performance. We want to see products being able to trace a line that says, here’s how we think we’re going to have a positive impact, support human flourishing. Here’s what we did, here’s what we measured to see whether that’s happening or not.

Richard Cunningham: Tim, one of the lines I’ve heard you give is that the credible objections or hesitations for advisors and institutions to keep saying no to this space are starting to disappear. So maybe unpack that a bit more, and then I want to go rapid fire with you both on a little bit of just kind of tying comments on the marks on the market style of this podcast and just overview a little bit of what we’re seeing as we turn the calendar from May into June.

Tim MacReady: So Richard the common objections we hear. The market’s not big enough. It doesn’t have enough depth. There’s no evidence that the performance is going to be similar. What if I’m giving up performance and leaving something on the table? And that’s a legitimate question, right? Like we want to be faithful stewards to invest as the master would have us invest. We get objections around kind of my advisor doesn’t understand this or all of these kinds of things. And what we’re seeking to do is systematically explore each of these objections and understand how valid they are. I think with $100 billion in 164 mutual funds and ETFs, the kind of depth of the market argument is dead in the water. There are some niche areas where faith based products don’t exist. There are, for example, that we’ve found zero index bond funds. And so if you really want an index bond fund in the faith based market, you’re going to struggle to find that. But there are a lot of low fee bond products that seem to perform very closely to the index. If you like growth stocks, there’s growth products. If you like value, there’s value. If you like small cap, the small cap. All of these different styles are available in various products. And so I think argument number one, the depth of the market isn’t there. I think we’ve comprehensively demonstrated that by and large it is. If you want to get into some very niche strategies, it may be harder, but the depth of the market is there for the vast majority of what clients and advisors are looking for. The second question is this performance question that we believe we’ve tackled this year. And I mean, as researchers, we want to have integrity as we approach our research. As we went deep on performance, we didn’t know for sure philosophically, theologically, as John has articulated, we think that there’s a lot of merit to faith based investing strategies in terms of the way God has set the world up to work. But what would the evidence show? Well, the evidence is showing that the performance is there in line with the broader market. And so we think we’re on the edge of kind of comprehensively busting that myth as well. Or that objection in terms of my advisor doesn’t understand this or can’t access the strategies. This is where we want to really challenge people. Push your advisor, make your advisor work with whoever is controlling their list of products to get these strategies on, and kind of tell your advisor, well, if you can’t get me access to these kinds of strategies, then maybe you need to think about who you’re working with, because there are [….] firms out there that will give advisors access to these strategies. And sometimes people need to be willing to push their advisor or encourage their advisor to move. There are some areas where I think there’s legitimate concerns. The work that we’ve done on […..] this year does show that faith based investing is marginally more expensive than its secular counterparts. We would encourage people to kind of wrestle through is that small additional cost worth it for the extra value that these organizations are bringing? All of the things that make faith based, investing genuinely faith based take time and they take effort. And so it makes sense to us that those products would be marginally more expensive than the non faith based counterparts. And so while that might be a legitimate objection, we’d encourage people to kind of wrestle with that question of what would the master have us do with what he’s entrusted to us? And is 15 basis points really that much of a barrier when you look at the value that a lot of these faith driven managers are actually generating in terms of their not just its screening, but the impact on the companies through their engagement work. So we think that most of those barriers are either kind of demonstrated to be easily overcomeable or on their way to kind of having solutions.

Richard Cunningham: And that’s good. Tim. And it’s really good to hear you articulate. It paints the necessity and the importance of a firm like yours in the work you’re up to. All right, both of you, rapid fire. We’ve done a marks on the markets and really on here on like the state of faith driven investing. But I want to do that even further and just kind of say what key happenings in the markets. You got rapid fire here. And I know that’s not much time to unpack what’s going on in the economy and public markets, but we’d love to hear from both of you what you’re seeing lately and you’re working in your research.

John Coleman: You know, I think since the last month, one of the key themes in the market, I’ll highlight two themes that I think are really prominent right now. One is the disconnect in the way that people feel, at least in the United States, versus the statistics on the market generally. There have been a number of surveys recently, particularly with the presidential election coming, showing that a majority of Americans feel that we’re in recession, even though the data would not confirm that. Quite the opposite, a number of Americans are feeling inflation more acutely than the data would say is happening. And so there’s actually a really active debate right now about the distribution of economic activity in the United States, even though we’re not technically in recession, even though inflation seems to be slowing, at least the growth of inflation seems to be slowing. It’s normalizing a bit. Even though the markets are up, many people are still feeling the impacts of inflation and what they perceive as an economic slowdown more acutely. And indeed, there were some statistics recently that showed at. Least in real terms rather than nominal terms, that the majority of Americans are worse off than they were a few years ago. From an economic perspective, because inflation has outpaced their personal well-being, and there are even a lot of serious people now discussing whether CPI and inflation measures capture what’s important. One of the easiest to understand examples was, recently there was a report that put out the increases in fast food prices at places like McDonald’s, and you could see that a lot of menu items had either doubled or more than doubled over the course of the last few years, which, of course is greater than what I think it’s been about 18% inflation over that period of time. And so there’s a feeling that maybe CPI isn’t accurately reflecting the types of things that are hitting most Americans, particularly things like housing, things like food, etc., that are quite important to them. And then the second topic that I see that we’re tracking is this continued disconnect between what I’ll call the Mega stops, the Mega cap stocks in small and mid-cap stocks. Large cap stocks have been on a roughly decade long run. Now, it’s not even just large caps. It’s the Magnificent Seven, or potentially a slightly larger group of securities in that, led by companies like Nvidia and Nvidia was worth $100 billion a few years ago. Now it’s worth $2.5 trillion, I think. And they just released earnings that outpaced even what the analysts expected. And I think there’s a question mark about how much longer that can last. Like, will we see a reversion to the mean between mid-cap and small cap stocks and large cap stocks? Or is there something sustainable, particularly in this mega cap run, particularly related to innovations like artificial intelligence that make it more sustainable? So I think all of us would have thought maybe a couple of years ago, like Nvidia has to slow down at some point. And yet it could be that AI is just becoming such a critically important part of the economy that we’re seeing a fundamental economic transformation. And so I think there’s a lot of discussion right now around what people’s public markets exposure should look like. Given that historically mid-caps and small caps are now undervalued relative to large caps, and yet we continue to see this persistence in return. So those are two topics, at least over the last couple of weeks that I’ve been tracking.

Tim MacReady: Yeah, I’d agree with John there. And I’ll pick up that point and kind of run with it. I think this dislocation that’s happened between the large cap growth stocks, particularly those Magnificent Seven and the rest of the market, is really interesting. It does seem to be largely driven by these kind of expectations of productivity enhancement through artificial intelligence. And I think those stocks are positioned well to benefit from that. But people have seen that when we look at parts of the market that might be undervalued. One of the questions that I would ask is, well, who are the other beneficiaries? All of this artificial intelligence is going somewhere. Nvidia produces and is deeply involved with kind of many of the systems that will enable artificial intelligence, but where are the companies who are going to be the beneficiaries of this, whether it’s pharmaceutical companies that might be able to significantly increase the pace of their research or the effectiveness of their research, whether it’s professional services firms where they might be able to significantly increase productivity by using artificial intelligence tools to automate many of the responsibilities of those firms. We just haven’t seen the same run up in the companies that are going to be the beneficiaries. And the uses of artificial intelligence that we’ve seen in the companies that are going to be the protagonists and the drivers of the creation of the tools of artificial intelligence. The second thing that I kind of draw attention to is around this kind of economic outlook, interest rate […..] that we’re at at the moment. For most of the last couple of years, the consensus was that all of the money that we had pumped into our economies in Covid, all of the kind of reduced interest rates that then kind of saw interest rates sharply increasing, that there was going to be a day of reckoning for that. And that day of reckoning probably looked like a fairly typical recession. Well, that’s not how it’s played out in the US. Companies and corporate profits have been really strongly resilient over 2023 and 2024. Europe struggled a little more, but even in the last quarter, we’ve started to see good economic activity indicators coming out of Europe there surprising to the upside. And inflation is tracking back towards the kind of 2 to 3% target across developed markets, albeit with all the caveats that John has mentioned there around, whether it’s actually still as useful a metric as it was. And so investors are now expecting not to fall into a recession. We think that’s probably a reasonable expectation. There’s an optimistic outlook among investors that doesn’t match the more pessimistic outlook among consumers. And we think a lot of the gap between those two things is going to be borne out in the pace of interest rates cuts, if and when they do come, people are expecting rate. Cuts to come in the latter part of 2024 into early 2025. If those are delayed, we may well start to see that business confidence and business indicators dropping back to where consumers are. If the rate cuts come through and we start to see a lot of people, particularly in the US, refinancing mortgages and feeling more comfortable with spending, then perhaps the consumer outlook increases to match the current business outlook. But I think if I were watching one thing over the next six months, it would be what are the expectations of rates in terms of what the market’s thinking and how that matches up to what various central banks around the world are saying that their intentions are?

Richard Cunningham: Right on. Impressive, gentlemen. That’s the markets in, like, 5 to 6 minutes with Tim MacReady and John Coleman. Very impressive. All right. Tim will take us home with this. This is our favorite question to ask on the FDI podcast. What’s the Lord been teaching you and in through his word lately. And we’ll close with that.

Tim MacReady: So I have spent a lot of time in years past thinking about contentment as the foundation for all Christian financial activity. It’s contentment that enables us to be joyfully generous. A discontent person can be generous. They can kind of, through gritted teeth, pull their wallet out and put money in the plate every Sunday. But the biblical command or invitation is not to generosity. It’s to joyful generosity. And only a content person can genuinely be joyfully generous. What I’ve been reflecting on in the last 18 months or so is how much trust leads to contentment. As someone who’s kind of studied a lot, both theologically and in investment markets, working in finance. I’ve thought a lot about trust and contentment. And I thought when we were living in Australia, I’m doing a pretty good job of trusting God to be my provider of not relying on external things. But I can tell you, when you pick up your family and move 8500 miles across the world to another country, it really challenges and things that you thought, yeah, I’m trusting God for that. You realize that? No, it was just that I had a sense of stability and security and having lived in the same house for ten years, and kids have been going to the same school for six years, like, it’s actually not that I was necessarily trusting God, but that that sense of stability was there. And so I didn’t need to trust. And so we’ve faced a whole range of situations, from simple things like going to the DMV and getting a driver’s license to working out how to buy a car when you don’t have a credit history, and all of these kinds of things that have really challenged my sense of stability and contentment and finding in myself that I think that always points back to a trust issue in God, do I trust that he is my Heavenly Father who loves to give good things? Who wants the best for me, and who will give me everything that he has promised? Not everything that I want, but everything that he has promised that he will give. And so I’ve been doing a lot of thinking and reflecting on that, and just the way that instability shows us where those places where we might have thought we were doing pretty well, but actually our trust might be a bit shallow than we expected.

Richard Cunningham: Wow, Tim. That’s good. That’s a really good word to close on. Well, friends, this has been Tim MacReady on a faith driven investor. Mark’s on the Markets podcast episode. What a joy to have you on. Thank you for the work you’re doing through Bright Light to you and your team. This has been exceptional for John Coleman. What a blast, gents. Have a wonderful day and we’ll catch you all next time.

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Today on the show, we’re highlighting an asset class that we haven’t talked about much in the past. 

Our host, Luke Roush will be joined by Trevor Hightower to talk about investing in agriculture.

The two will talk about how this unique industry brings a ton of potential for positive returns and redemptive impact. They’ll also discuss how God has worked in Trevor’s life through setbacks, mentors, and unexpected opportunities.

Episode Transcript

Joseph Honescko: Welcome back to the Faith Driven Investor podcast. Today on the show, we’re highlighting an asset class that we haven’t talked about much in the past. Our host, Luke Roush, will be joined by Trevor Hightower for a conversation on investing in agriculture. The two will talk about how this unique industry brings a ton of potential for positive returns and redemptive impact. Let’s get into it.

Luke Roush: Welcome everybody to the Faith Driven Investor podcast. We are grateful to be here. We have a wonderful guest today in Trevor Hightower, a longtime friend, first time guest on the podcast. I am your host, Luke Roush. And welcome, Trevor.

Trevor Hightower: Luke. It’s an honor to be here. Long time listener and it’s great to be on this side.

Luke Roush: Wonderful. I must say, I’m really excited about today’s call because of the asset class that Trevor and his partners are focused on, which is agriculture. And so, you know, most of the time when people think of investments, they picture urban areas, technology companies, Wall Street. But the team at Macfarlan is investing in ag. All of us eat every day. So this is a subject matter that we should care a lot about. But, Trevor, why don’t you give us a 30,000 foot flyover of what the ag industry looks like and the role that Macfarlan plays in that arena?

Trevor Hightower: Yeah. Happy to. We first got focused on the asset class coming out of the pandemic, and historically, Macfarlan Capital Partners had invested and value-add office value-add retail real estate as a GP sponsor, doing deals deal by deal. Macfarlan Capital Partners always had a thematic focus where we could switch in and out of assets based on the right timing and the right conviction. We had conviction coming out of the pandemic. I think that many people had pretty early to [….] credit that inflation was coming. The other conviction that we had was we had a loss of conviction around the asset class that we had historically invested in, which is the office asset and retail asset class. And so to the credit of the team, when you’re looking for a non correlated asset, an asset that doesn’t trend with other assets on the return profile and as an inflation hedge, it’s not too long before you get to farmland. Just when you look at the historical data markers, farmland has been tracked and [….] index for about 30 plus years. And the asset, as you mentioned, has very low volatility, historic returns that are on par with the S&P 500. So just under 12% returns in that same time with low volatility. And then that really fascinating, historical marker with farmland as you mentioned. And kind of why we got focused on it. Was it being a non correlated asset, one that is negatively correlated with public equities and then has zero correlation, interestingly enough, to other real estate asset classes. And the reason for that is not too complicated to understand. It’s actually pretty straightforward. It’s the macro drivers that drive the farmland asset class, which they’re really redemptive macro drivers that the world needs its food, fuel and fiber. It’s not a surprise to anyone listening that food, fuel and fiber is growing in its demand as world population grows. And then we have a growing middle class. What might be a surprise is on the supply side of farmland, there’s the age old expression to buy land. They’re not making any more of it in farmland. It’s interesting that it’s actually a decrease in supply for new development reasons and some water issues. There’s a pretty rapid rate of decrease in supply in farmland. So when you combine growing demand and decreasing supply, you can see why there’s been a pretty strong secular drive for both the appreciation of farmland and then how farmland generates income is through the yield of its crops, which has had to increase and has done so because of technology. As an investor, the yield is either from a lease. So this is why I call farmland the OG of real estate. Because on leased farmland, it’s essentially a commercial real estate asset. You have, income driven by a lease or a rev share. And then the other source of income is the appreciation of the asset. So that’s very similar to how a lot of real estate investors would think about a real estate investment. You just have, really strong risk adjusted returns that are supporting the farmland asset class.

Luke Roush: I think the analogy of commercial real estate, and this being a different type of commercial real estate, is really relevant to a lot of our listeners who may be really familiar with that asset class, maybe just share a little more on the specifics of how these investments might be structured. And just to orient our listeners.

Trevor Hightower: Yeah, they’re very similar to real estate investments. Again, as I mentioned, let’s just take a farmland asset that is a leased asset. One thing that is a difference between other real estate asset classes is the typical yield that you’d have from a lease is going to be lower than some of the other real estate food groups, whether that be multifamily or industrial or office. You’re looking for leverage at a. Yield in the 4 to 6% range in farmland. So when you add a 4 to 6% yield from a lease with appreciation, that’s where you’re getting that low double digit return. And that’s the historical return profile. You’re just doing it in a safer asset. And that’s what we really liked is a non correlated, safer asset that in a portion of a portfolio investors can get exposure to. But to dive in a little bit deeper, the two primary structures in farmland that you could set up are a lease or a rev share. The lease is going to be very similar to a commercial real estate asset. It’s going to be varied in terms. The one nuance is the full lease gets paid upfront, typically so that the farmer pays the full amount in March, and then you have that lease that will extend for the period of the year, and that will be your income on the asset. The rev share model is taking a percentage of the yield of the crop and exposes the investor to commodity risk and yield risk. So the two factors that would drive the revenue of a farm on any given year is going to be commodity prices. And then the yield based on how much bushels of crop are harvested. And so in a rev share model, the investor is going to be exposed to a little bit more volatility, but be able to get more of a range. And ideally if you’re going to go into a rev share model as the investor you’ve underwritten that you want to take on that additional risk because you think you’re going to, on average, get a higher blended yield over the term of the investment.

Luke Roush: Yeah, that makes a lot of sense. And, you know, you’ve participated in some of the different food groups that you called out previously. I want to go to kind of your interest in this asset class. Like what’s most compelling for you talked about just some of the inherent appeals of food, fiber and fuel, but maybe speak a little bit about your own personal journey, because I think that’s helpful.

Trevor Hightower: Yeah. I mean, so you’ve had great leaders on this podcast that are in the small to medium sized business investment, like [Brent Beshore], and really trying to bring a redemptive solution to what is a major problem that needs to be solved in our country, which is the transfer of ownership of a lot of assets that are going to occur because of what it’s typically called the silver tsunami. But that dynamic of a majority of assets being owned by baby boomer generation. And then in many cases, there’s not the second gen or the next gen behind those assets owners that either have the skill or the will to take on the operation of the asset. Well, that dynamic is absolutely playing out in farmland in a very significant way, in a way that, to me is existential and important to our country and really the vibrancy of our food, fuel and fiber supply. So just to lay out some of those data points. The farmland is a $3.5 trillion asset class that is every bit as large as the US office market or the US multifamily market. The nuance in farmland that’s very different from the other real estate food groups is the the lack of institutional capital in this space. So.

Luke Roush: Which is shocking to me.

Trevor Hightower: It’s amazing. It is shocking. It has been changing and there’s been more capital in the space. But yeah, as you know, Luke, it’s less than 2% institutional capital that own, you know, up to $3.5 trillion of that, just the United States of farmland. So that means that 98% of U.S. farmland is owned by generational farmers, who really have been the backbone of our country. These are amazing men and women. I mean, I have such a growing respect and appreciation for the United States farmer and really what needs to continue as a majority of ownership, continuing to be in these incredible owners, if they have a solution for the next generation to come and farm. The issue is in many cases, the next gen doesn’t have the skill or the will to farm. And so what you’ve been seen as aggregation of farmland by more successful, I’d say farmers who are able to operate at scale and use some economies of scale and use some really good technology and best practices to start to aggregate larger portfolios of farmland that they can operate. And that’s the portion of the market that we’re trying to support, and we’re trying to support the best in class operators that are values aligned, that have a redemptive view of large scale farming so that we can continue to produce really great yields of food, fuel and fiber, but do so and a regenerative way. And that’s only part of the solution. There’s so many other really great redemptive solutions that. Are more micro in nature and those are needed. It needs to be multi-pronged solution to think about how the next generation of farming is going to occur. But that’s what gets us really excited. Effectively, we can be growth equity partners to these best in class operators that are really trying to operate in a way that is maximizing the, financial, but also what’s best for the land and the surrounding communities. And that’s what we found in our first partner and what we love to do with, more partners going forward.

Luke Roush: That’s wonderful. And talk a little bit about just your journey. I mean, you most recently were an entrepreneur or started your own business, and you’ve known the Macfarlan team for a long time, but maybe just talk a little bit about that transition from craft work to Macfarlan and what God taught you in and through that journey.

Trevor Hightower: Well, I really appreciate you asking. And it’s, redemptive story. And I hope it’s one that’s an encouragement to other entrepreneurs out there or other investors out there. To me, it’s a way to highlight and provide a great testimony of Dean Macfarlan and Mac Macfarlan, D. Macfarlan was the largest investor in Craftwork, the company that I co-founded, with my partner, Riley Dean, was an incredible investor in that he was very helpful strategically to the business. We met every month. He got into the details. He helped in so many ways, strategically and tactically in our business and made it very intentional effort to do so. At the end of every monthly call that we would have with Dean, his very next set of questions were around, how are you doing, Trevor, as a husband, how are you doing as a father? How are you doing as a leader in your community? How are you holding up with the stresses of what’s going on in the business, and made it a very intentional effort to both, help steward the business and steward the entrepreneur. The best story around this is actually one of the most difficult, in that there was a investor meeting that Dean had asked me to prepare for, and I prepared for it like I was presenting in front of a a Wall Street bank. I mean, I was ready to go with my optimistic case, my base case, my pessimistic, and I hit that out of the park. I mean, I just I had a really good, convincing explanation of why a Craftwork was going to change the face of multifamily experience and hospitality. And he was very encouraging, had some points of feedback that were constructive and said, okay, Trevor, I’m going to take my investor hat off and I’m going to put my friend of Trevor hat on. And that’s something that I’ll never forget, and really something that if I’m ever in his position, I hope I can replicate to anyone that I invest in. And he asked me kind of some specific questions about my equity, and the company did some back in the napkin math and then just said something that I’ll never forget. He said, you know, Trevor, I am so proud of you for what you’ve done in this company. And he said, I still think that there’s a significant gap between what Craftwork would generate and the opportunity cost you have as an individual, because at that point there’s been some dilution and and also some challenges in the growth of our company. And he was highlighting both. And he said, you can do whatever you want. But I just want to highlight that because the other context was this was the fifth year of the company’s existence, and it had been really difficult on my marriage, and we weren’t growing the way that we really wanted. I just had the burn the boat mentality as an entrepreneur, and I couldn’t see any other path but to march forward. And this, our largest investor, was the one who actually told me to take a step back and see is it the right time that we look at, you know, at that? What would the selling parts of the business and closing the other part of it down? And I have to admit, it was very disorienting. It was the first time that someone I really trusted gave me permission to even ask that question, and I am so grateful for it. It was obviously very rare for an investor to take that approach. It took me about six months to actually agree that that was the right path forward, but it was something I’ll never forget. We then went through a process where we made that decision six months later to start to sell parts of the business and roll the other part down to do what we call a redemptive close down. And we went through Praxis Accelerator, and we’re just huge fans of Praxis, as I know you are. And they have the redemptive framework. And I remember we all just put our hands together and said, we want to with as much vigor and energy and vitality that we did in other parts and other stage of the business. Apply that same level of vigor to how we in the chapter. Which is, was really difficult, but essentially what it meant was what is the redemptive way to take care of our investors, our team, our stakeholders, our vendors in a way that was, you know, sacrificial. And I don’t think that we did it perfectly, but I know that we did that. And the amazing grace behind it all was those were long, hours, long weeks. Didn’t really have a lot of time to think about what was next. It was all in to try to do that well. Which was scary and scary for my wife. And so when it was all closed down, I started to think about what was next and kind of convinced that I was going to have to go back and get a real job. And the amazing grace behind it all was that’s when Mac reached out and asked, hey, do you want to talk? Dean and I just had a really healthy transition where Dean had stepped into senior Advisor and Mac had stepped into managing partner of the firm, and they were both praying for a partner. And you know, the reason why grace is so transformative is it’s undeserved. And it provides that clean fuel, because when you receive it, you just want to give back. And that’s how I felt with even the opportunity to work with Mac as a partner and still have Dean involved as an advisor, was I had known both of these men and really their team for ten plus years. We’d been in the trenches together in different ways at craft work, and I had seen Mac and so many different settings and just I never had to underwrite their character, and I never had to underwrite their heart. And they already had an impeccable reputation. So it just felt like grace. And it’s been why at this stage in my career, I’ve never been more energized. But it was through a lot of pain and a lot of uncertainty, and I wasn’t sure how it was going to all play out. But obviously God was in it throughout the whole thing, even at the darkest time. So God works all things together for good, not in the way that we have planned, but in a way that forms us and forms our character and ultimately makes us open our hands and surrender more to him. And I can attest to that. And I’ll throw out if there’s anyone out there that is in that spot and needs someone to talk to, just reach out to me, because I think the pain and trials that we go through are our greatest superpower. Then to help others once you go through them. So reach out if I can help in any way.

Luke Roush: Trevor, I think you just signed yourself up for at least 20 hours of couch time bringing on investors that need, some formation or entrepreneurs and information. But that’s that’s awesome story. And I love that word of just kind of formation. That is what God intends to do in all of us, not in an episodic way, but in a continual way. And certainly that’s evident in your story and the transition from craft work to Macfarlan. I’d love to wrap just with maybe just a couple of comments on you are very intentional, not just as an investor and some of the things that you talked about with farmland, but also as a husband and father, I’d love to hear your comments on coaching the journey that we’re all on as followers of Christ. And then, you know, there’s a way to tie in kind of the farming narrative and agricultural narrative of kind of crop formation, seeding, harvest. If there’s some way to do that, then you get bonus points. But we won’t we won’t say that.

Trevor Hightower: Oh, I like that challenge. Yeah. I would say, thank you for that compliment. And I will say, you know, the the people to really ask are my wife and kids. And I heard a story of someone who was kind of lauded in the public. He was a pastor, and it was his funeral, and everyone was there and just saying so many great things about this guy. And then his son was there and said, you know, I love that all these great things are being said about my dad. I just I never knew that guy. And that would be a total loss for me. And I think it’s just on my heart that I have a long way to go so that, you know, my kids and my wife are the ones who really get the best of me. But I had a awakening to that reality where I went through a life plan, and in that process, you identified what your giftings were and what your talents were, very much from the Scripture of the talents and the realization, which was really eye opening when I went through this was the bringing those gifts and my work. I was doing a pretty good job of bringing those gifts to my family. I wasn’t it wasn’t conscious that God had gifted me in different ways, that I was using it in my work and in business, that I should be using those very same gifts for my family. And I think a lot of guys and gals maybe miss that, that the gifts that really are apparent and that are making you succeed in business. Think about how you can apply those to your family. If you are a visionary leader which many listen to this that you are, no doubt about it. How how are you bringing your visionary leadership gifts to your wife and to your kids? How are you doing that? If you are an operational wizard, you know, how are you bringing your inner greater giftings to your home in a way that’s blessing your family, and I’m definitely more on the visionary side. Thankfully, my wife is an incredible integrator, if you know those those terms visionary integrator. That’s been a huge blessing to say, how can my wife and I really act more like a team in that way where I’m visionary and she’s integrator, and so I’ve been more conscious to bring that gift into my family, which does look like, you know, how do I come to my wife with more ideas about how we can, you know, bless our kids, bless our family. And so I think it’s kind of surprising, even as I talk about it now, that I didn’t recognize it for so long. But the encouragement is, again, if there are things that you do really well in the work environment, how can you bring those same gift things to your family?

Luke Roush: That’s great. Well, we always end each episode with a question about what God has been teaching you specifically in and through His word. And so I want to give you an opportunity to do that and share what God is telling you and speaking to you through His word.

Trevor Hightower: Yeah. Thank you Luke. This is where I will try to tie all of our passion around farmland and ag land together, along with how I’ve mentioned kind of key mentors in my life. And my mind and heart goes to Psalm one, which is blessed is the man who walks not in the counsel of the wicked, nor stands in the way of sinners, nor sits in the seat of mockers. But his delight is in the law of the Lord, and he meditates on that law day and night. He is like a tree planted by a stream of water, which yields its fruit in the season, and its leaf does not wither. And all that he does, he prospers. So ag land farmland has just so many references in Scripture, and the flourishing farmland is a byproduct of having the right source of nutrients and the source of water. What Psalm one reminds us is that the man who prospers is like a tree, is like a healthy, you know, farmland that is by the source of all things that is true and good and beautiful, which is God’s Word. And I will say just to shout out Dean again, that dude, you cut him and he bleed Scripture. He just has a scripture memorized in a way that it just pours out of him. And I want to be more like that. Terry Luper as well, that the key mentors in my life, I come to them with questions and they give me scripture, and it’s so ingrained in them because they’ve memorized and they studied and they’re like this man, that they are not giving just their own opinion. They’re giving God’s word. I want to be more like that and aspire more to that and be this fruitful tree that is mentioned in Psalm one.

Luke Roush: Trevor, that’s a good word for me, and I think for everybody listening to this podcast. So thank you Trevor.

Trevor Hightower: Thank you Luke.

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We’ve barely made it past January and we’re already seeing incredible work happening in the Faith Driven Investing Movement around the world and across various asset classes. From the conference streamed in over 100 major cities to small group meetings and an intimate gathering of Fund Managers, God is moving through Faith Driven Investors who are taking on this charge to build, give, and invest for God’s glory. 

So in today’s episode of the Faith Driven Investor Podcast, we’re going to hear Justin Forman and Henry Kaestner will share about the current state of Faith Driven Investing and show how you can get off the sidelines and get in the game, to be part of this exciting work. 

They mention a handful of videos and resources that we’ll link below

Dear Investor Video

Wichterman Story

Potomac Angel

Learn more about Groups

Episode Transcript

Joey Honescko We’ve barely made it past January, and we’re already seeing incredible work happening in the faith driven investing movement around the world and across various asset classes. From the conference streamed in over 100 major cities to small group meetings and an intimate gathering of fund managers. God is moving through faith driven investors who are taking on this charge to build, give and invest for God’s glory. So in today’s episode of the Faith Driven Investor podcast, we’re going to talk about the current state of faith driven investing and show how you can get off the sidelines and into the game to be part of this exciting work. Let’s get into it.

Rusty Hey everyone! All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies of securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Joey Honescko Welcome back, everyone to the Faith Driven Investor podcast. My name is Joey Honescko, and I’m filling in for our usual host, John Coleman and Luke Roush today. On a regular time, I’m getting to work behind the scenes as a producer of the show, but today I get to come out and chat with our two guest today, co-founders of faith driven entrepreneur and faith driven investor Justin Foreman and Henry Kissinger. Gentlemen, how are you doing today?

Henry Kaestner Well thank you. It’s great to be with you guys.

Justin Forman Awesome. It’s it’s an honor. It’s great to have you back. I mean, you’re you’re traveling a lot there for a bit.

Henry Kaestner I was traveling a lot. And it is a beautiful thing. More travel than normal. But, you know, we changed the way that we do the feature of an investor conference this year. In the past, of course, we’ve had this feature of an investor live, and we’ve had thousands of people around the world dial in same time. And there’s something really special about being a part of the programing and guest there talking. And just everybody’s experiencing at the exact same moment. And yet, of course, is the movement is getting more global. That gets to be pretty difficult with time zones. And so then we went ahead and we started doing it. So it’d be the same time, you know, say 8:00 in whatever region were in. But most recently we did something that allowed us did have a really neat barnstorming trip through Asia, and that is that engaged host and long term advocates for feature of an investor got in and said, you know, we’d like to host a watch party and cash would be great if some of the folks that are featured in the conference might actually be there for it. So that gave us an opportunity, as we’ve tried to be more and more flexible with that, to be in Jakarta on Tuesday and Kuala Lumpur on Thursday, Singapore was on Wednesday and Manila Friday, Hong Kong on Saturday. So it’s awesome. And what was so encouraging for me is that, you know, ours is a movement that’s powered by 3500 volunteers. And most of them, to be clear on the feature of an entrepreneur side, but a growing number on the feature of an investor side. And they’re just leaning into the fact that, you know, we’ve got space in a church or in my business conference room, and I can invite 15 or 20 folks and let’s get around the table and let’s watch it. So we’ve had watch parties. I think it’s small with maybe 5 or 6 and as big as, I guess, maybe 120 or so getting together and community fellowship. And I get a chance to experience that and eat some phenomenal food. But there’s just something really special about experiencing a movement of God in different cities and realizing how universal God’s love is. Anytime you get to be with God’s image bearers, they come from different cultures. That’s a special thing. And just, is really encouraging.

Justin Forman Yeah, it’s so fun to see it. It’s a local movement, but connected with that shared DNA. But, you know, you’re talking about watch parties of all sizes. It’s fun to see some of the yeah, ten, 20, 30 people in a smaller watch party. But you also had some hosts that had some epic setups. I mean, there were some screens there that, like, belonged in the basketball. Oh yeah. I mean, you had some great setups here.

Henry Kaestner The technology in Singapore was amazing. We had a, I don’t know, a 70 foot wide screen. It was unbelievable. If you sat on the far left of it, just the way it worked, whoever was on the video looked much bigger. And so it’s funny, I was sitting on the left hand side and as I was doing that co-host segment with Luke, it made me look like a giant. It made him look like a little puny guy, which I thought was very, very funny. I took a bunch of pictures of it I sent to Luke is Luke’s, of course, a former football player, and I’m very much not. So I enjoyed my couple of minutes of being physically bigger than Luke.

Joey Honescko Yeah, it’s cool too, because it’s not just in Asia. That’s where you got to go. But you know, we had dozens of folks meeting in Ukraine, was one of the big watch parties. We had, people all over Europe, Africa, in the US. So there were all these really cool things. One of the videos that stood out to a lot of people was this Dear investor, story. And, Justin, we’re going to play the clip here in a second, but I wanted to set you up a little bit because you were kind of thinking about the value of this clip. Talk a little bit about just the vision behind it, and then we’ll play it and talk about it a little bit.

Justin Forman Yeah. It’s a gift to be able to work with such a creative team. And as we’re thinking about some of these pieces with a Dear Entrepreneur video that we did at the Feature an Entrepreneur conference this year, we felt like we wanted to present the issue from a bunch of different perspectives. And so in that piece, we were trying to speak to this wound that a lot of entrepreneurs carry, this feeling like there’s a disconnect in the church. And so when it came to investing, we came to this piece we’re trying to wrestle through, I think really two things. One, like, how do we present this thing that God’s calling us into, not as it got to, but as it get through. And I think internally we’ve talked about like, how do we marry that passion and boldness that we. A friend like David Platt has in his teaching to this contagious joy of like, Nicky Gumbel. And so the people see it’s not like out of compulsion, but it’s this upside down journey, an adventure that’s fun and exciting. It’s living on the edge. And so we endeavor to try to create a piece that did that. But then the second thing that I think that was so much fun was really showing what Henry’s remarking on us is the global nature of the movement, that this is not one ministry, this is not one organization, one fund manager, one pastor, one anything. It is a collective thing. And the snippets of these pieces from voices of leaders in the movement from Africa to Asia to the US, in all different asset classes and generosity in investing and young and old. It was just fun to really kind of pull together a piece that I think is kind of like an anthem cry of saying, okay, what is this really all about? So yeah, it was a lot of fun. We’re so grateful for so many friends that contributed to the piece, and it’s been really encouraging to see how it turned out.

Joey Honescko Yeah, the video is definitely worth watching. It adds a lot with the visuals, but here we’re just going to play. It’s about three minutes. We’re going to play the audio clip and we’ll jump back in after that. It’s time we had.

Video Transcript An honest conversation about wealth. Money has power, and Christ followers are just as enticed by what it offers. We’ve been trained to think that comfort comes from collecting and consuming. We fill storehouses with security and give just enough away to feel good while staying safe. We might check boxes of generosity, but our desires are suddenly focused on prestige, recognition, stability. We don’t have to settle for a casual, comfortable Christian spin on the world’s definition of success. We don’t have to try to balance God and money. Jesus makes it clear that we cannot. We can only serve one master, not two or even one and a half. Money beckons us with promises of power, but then it holds his power over us, makes us operate from scarcity, not abundance. As if God never fed thousands with a willing kids lunchbox, the boy gave up all his power. Five loaves, two fish, 100%, not ten, not 20, or even 90. And it wasn’t about. The tools he held, it was about how he held them, saying, Lord, use what power I have for your good and your glory, not mine. God has given you a lunch box to. He’s equipped you with capital, influence, leadership. And he’s inviting you into an incredible journey where you partner with and see lives changed and communities restored. But it starts with surrender. It’s his plans for your investment, not yours. It’s his reputation that drives you, not yours. It’s his mission that consumes you. Now yours. See, there’s a growing movement of faith driven investors deploying capital for God’s kingdom. And you can be a part of it. As individual investors, fund managers, advisors, ministry leaders. We have different roles. Yet our calling is very similar to glorify God in all that we do. God doesn’t want to guilt you into anything. He wants to invite you into a wildly different way of seeing everything. He wants to bring you on an adventure into an upside down world where you find joy through surrender, where you receive, when you give, and where abundant life comes down from weighing your life down. Every investment has an impact. What will yours be? We want to see God’s will done in every corner of the earth, from every tribe and nation and time under his power and for his glory. Amen, Amen, Amen.

Joey Honescko I think one thing that stands out when I hear that video, and I’ve heard you guys both talk about this a lot, and it’s worth mentioning, is this idea of joy through surrender that this isn’t a trading down or a sacrifice, but this is a trading up that comes from living out the way that God has called us to. So I’d want to give you guys a second just to kind of riff on that particular topic. And then I’d love to hear what kind of stands out in the particular lines that are meaningful to y’all as well.

Henry Kaestner Well, I think there are a bunch of things that are at play here, and I think that one is absolutely a joy through surrender. But I think that it works best when we embrace this theological concept that God owns at all. You’d think that would be very, very bad news for the person who is. Up until now, I thought that they owned 90% of everything and got on 10%. Any day in which you lose 90%. You know, that would be a bad day, you’d think. And yet, the counter cultural reality of the way that God designed the world in us to be in relationship with him is that as we do surrender, we get this joy and we give up this monochromatic life that’s conformed to the pattern of world. And we walk in this technicolor, beautiful life of living with God in and as his steward, rather than the burden of owning and all the things that money can do as the worries of the world and the deceitfulness of riches kind of crops us. When we change that, it is something that’s really powerful, and yet that is amplified when we do it together in community. See, wealth isolates, and that’s a challenge. And it’s maybe the way that Satan would have it. Wealth isolates us. And as people have more and more wealth to steward above and beyond that which they might even need in this lifetime. But definitely in the course of this year, people try to hold themselves out a little bit because they’re concerned that people are asking them for money, and most people do. When we’ve all done that, we’ve all been at different stages in our life. We’ve seen people that have more wealth or power, and so we are attracted to them and we want to we want to invite them into what we’re doing or ask something of them. And so while it tends to isolate, I think one of the most powerful parts of what happens is FDI watch parties is that you get these two things happening together. One is the joy through surrender and the joy and real, with a real emphasis on the joy. And then doing that in community and experiencing that joy together in a non prescriptive, presumptuous way. It’s not like, oh, well, if you’re not investing in this fun, whether you’re not doing this well enough. No, it just is. What is God telling each of us? How do we share best practices? How do we do this in community? And that becomes something really beautiful.

Justin Forman You know, I think one of the things that strikes me about it is what Henry is talking about here, Joy, is I think we’ve gone as far as obligation can take us. I think in the church that this conversation of obligation or obedience or you should versus you get to like, I think that we have to pivot because I think we’ve gone as far as obligation has taken us.

Henry Kaestner I think that’s a good word, you know, because we try to be faithful and obedient. Right? But there’s something on the other side. But what you’re saying, I think, is that we’ve kind of maxed out the whole dialog around money and power and possessions and all those things has been about faithfulness and obedience. And there’s great scripture on that right side of self take up our cross, etc. and yes, we need to be faithful and obedient. And yet so much of the gospel message, of course, is on this other end of the spectrum, right?

Justin Forman Oh, absolutely. And I think it’s you have to get to the other side. And it’s hard to like, even talk about the joy until you get to the other side and taste that joy. And I think that like, it’s what you’re hitting on is, is when you do it in community, people help you get over that gap, that chasm, whatever it is. And once you get into it, it’s I mean, your analogy of Technicolor, some of our listeners might be a little bit too young for that. It might be 720 versus 4K, whatever the analogy is. But the point is still the same. It’s like once you see it in Technicolor, once you see something in 4K, you just can’t go back. And it’s that joy element of it that, you know, it’s like we’ve made it so complex sometimes that it’s so simple. And I think that at times, like when you said that aspect of like, there’s a selfishness in this, in some ways it’s like, I do this because I want to feel God’s pleasure and then experiences joy. But I think it speaks to Scripture where it says, actually, it’s not selfish. It’s like when your prayers are aligned with his heart. That’s the beautiful thing. It’s not that you’re pulling in a different direction. It’s it. You’re praying for joy. You’re wanting joy. And those are the prayers God wants to answer. You don’t have struck by that because. So this week we’re filming a project for faith through an entrepreneur, an investor about prayer, and a friend, Derwin Gray, pastor in North Carolina, spoke to this concept and he let this simple statement said. He said, If God answered all of your prayers, would your life be more holy if he gave you everything that you prayed for? Would it look more like his kingdom, or would it look more like an Amazon shopping list? Would it look like that? It really stepped into what God wants, and I think that’s what you’re hitting on is, is like when we’re pursuing joy, when we’re pursuing that, like God going to step into those moments. And yeah, there’s just something about joy. It’s going to be just, I think, a key piece of this movement for the years to come.

Henry Kaestner I’ve got to answer all my prayers. The Ravens are doing the Super Bowl. I think that’s a great point. I’m so excited about that series coming out. It makes me think about Chip Ingram as a frequent contributor to all that we do. Effort driven. Who talks about the four prayers that God answers being Ephesians one and two. Philippians one, Colossians one two about really praying in a way that is in line with God’s heart, with a hopeful expectancy, that in doing so we will experience his joy. Because that’s the way the God designed us. And yet so much of what we do is it tend to be apart from that. And so it’s this balance. Just to recap, for those of you who are following along, it’s just faithfulness, obedience on one side. Right. There’s this. You know, we hear about the tithe and there are different things that we need to be thoughtful about. And they’re very good points in Scripture. And yet this movement is about taking that that’s already in existence, of course, and then bringing over the sense of joy and gratitude on the other side. So the gratitude coming from the fact that we’ve been given this gift of life and we have it now and forever and just opportunity to participate in the work that God is doing in building the world. So we’re grateful for the fact that we get to do that. And then the joy that comes with bringing that all together and doing it in community and seeing things that are just infinitely more fulfilling than all the things we otherwise would have wanted on our Amazon list. And yet, I’m so grateful we’re doing this this morning, because otherwise, every day, if I don’t talk about this or think about this, or do this in communion, maybe not every day, but on a regular basis, I will drift back into being conformed to the pattern of the world and the deceitfulness of riches. And maybe that’s because of the power of mammon.

Justin Forman Yeah. A powerful thought there. You know, one of the other things that maybe change in conversation a little bit, Henry. I’d love to hear your thoughts on just these moments, these events, these conferences. It’s a fun, like, kind of measure up moment where you can see where the movement has grown. The steps that have been taken. We’re such doers as entrepreneurs. Investors were always thinking about what’s next, what’s next, what’s next. And we don’t have those moments of like pause and reflect and say, man, how far things have come. How much God has been up to. And I don’t know about you, but I was just struck by so many of them. I think two things that stood out to me was one was just the momentum in the conversation with Dallas Jenkins that John Coleman had, and just about the wonder projects and some of the big things happening. And there have been recent news here in the last couple of weeks about the House of David series. That’s going to be a part of that Amazon Prime getting behind it. You just can sense this momentum of conversation that’s happening there on that front and the faith driven investing community really rallying behind that. But I think the other thing that stood out to me was just Tim’s conversations about just the growth and the maturing that’s happened in this phase. I mean, I think some of the statistics that he said in that was that we’ve gone from, what was it, 22 products to 155 with 29 new products and funds, kind of launched in the last two years. And in then he started talking about that, I think mainly first from just a public markets perspective, but then he shifted it into just kind of the whole movement as a whole. And I mean, you’ve been in this I mean, even from the beginning, like, how does that conversation, when you hear Tim talk about the progress and the things that are happening, how does it impact you?

Henry Kaestner Well, I’m encouraged by. There are a bunch of different things to point to. I think that this year we had a feature of an investor conference for professionals and the venture capital private equity industry. So it’s last Friday, and we had 168 of them at the Rosewood Hotel in Menlo Park. And it was so cool to hear about how some of these fund managers are incorporating chaplaincy, or offering chaplaincy up to some of their portfolio companies, and starting to feel better about sharing their faith in a winsome way to their portfolio companies, and how increasingly faith driven entrepreneurs in emerging markets are getting access to capital that is aligned with their faith. So there’s some incremental things that are developments in pretty much every type of industry, real estate. Absolutely. But then, of course, private equity in venture capital now, and also on the public market side. So we have, you know, there’s a first ever ETF that’s investing in Christian CEOs, a publicly traded company. So companies that are publicly listed run by Christian CEOs. And there’s just great work that’s being done by Eventide as they continue to invest in a way that makes a world rejoice. I mean, there’s so many different great things that we hear about along the way. And yet when I hear of people coming away from these conferences, it tends not to be any one particular thing. It tends to be the sense of, wow, I found a community of people that are really wrestling with these things, and the benefit and the joy, and the thing I’m taking away from this was how I just feel much more alive in my faith in this community. And that happens on the watch parties, of course. And I happened at the conference we had at the Rosewood. But it happens with these faith driven investor groups we have. The biggest takeaway is like, I was in this group for six weeks, an hour a week. You know, we go through and learn about some of the things are going on. But I met people struggling with the same things I am. And, you know, can we make money doing this? If you’re talking about feature investing, is it mean that we need to just go ahead and just, you know, give up Alpha and in the name of Jesus or what does this even mean? Am I judged because I do this or that? And just being able to process all of these things together and finding new friends and a bunch of them decided to go to Africa together to find out what’s going on in Africa. So I two weeks from now, it’s a group of about a dozen that are part of Phaedra investor Group are going to go to Nairobi, Kigali and Lagos, Nigeria just like, hey, we’ve all been in this group together. Let’s go talk to some fund managers. Let’s find out if we can do this in a way that makes an impact. Let’s find out if we can actually find some fund managers that actually can provide some good return. And what does it even look like? But I think that in each case, the what’s really drawing them together is this kind of like it’s a I don’t know if this worship is the right word, but it’s this it’s this togetherness, is this community of people just like, hey, we’re all trying to figure out how to steward what God’s given us. Let’s do it together. And the joy that comes from that. I’m really looking forward to hearing with these folks, these 12 people learn when they come back.

Joey Honescko Yeah. What I’m excited about what you’re saying, Henry, is pulling all these different pieces together. We’ve talked about heart change kind of in this early stage with this Dear Investor video, this going from black and white to Technicolor existence. And then you’re talking about the role community plays in shaping that. And I think Tim’s content and some of the other things that we’ve seen here talking about the. Opportunities to really get in the game. And one of the coolest takeaways for me when I was watching the conference was seeing stories like the Germans or the Farrells of these people that actually stepped up and saw, hey, I can get in the game, I can do this. And one thing that I was thinking about, Henry, as you were talking, is in your early investing journey, how did community help you align your faith in your investing? I’ve heard you talk a lot about the way that community in general does that. I’d love to know, just kind of from your own experience, what that has looked like.

Henry Kaestner Well, everything I’ve ever done entrepreneurially it’s always been done with a partner. You know, the most recent example, of course, is Feature of Movements with my partner. Justin is on the line right now with us. And the case for me to answer your question is co-founding Sovereign Capital with Andre Mann and with Luke Roush. And Luke and I continue to talk like once a week as we just process what God is showing us as we steward our own personal capital. But then as Luke, as a fiduciary, and I’ve moved on now I have a full time in the ministry. But just as he and John Coleman are fiduciaries of other people’s money. But I still get involved because we’re looking at these trends about what’s going on in real estate investing and what’s going on in public markets, and how we’re thinking about voting proxies, and how do we have a winsome witness to our faith as we steward capital? So for me, it was when you talk about joining a community started off really just deep partnership. And Luke and I committed. I can never done this by myself for that matter. I could never have done bandwidth without David. I could never have done Chapel of Brokers without Tom hunt. I think I know that God has designed us to be in partnership. Jesus, you know, sent two grown men to go get a donkey. So there’s this opportunity to do things together because it’s otherwise it’s just super hard, super hard for me to do anything by myself. Thank goodness he sent me. Kimberly. I don’t know what I’d be if I didn’t have Justin as my partner of Faith driven, and Kimberly is my partner at home. I don’t know, I probably would be eating wild honey dressed in camel’s hair.

Justin Forman You know, Henry, one of the things that strikes me about that is it’s like, yeah, you’re just talking. You’ve talked about community beginning. Then you broke it down to like, from 0 to 1. You broke it down to that idea of like, what does it take to find that person, that partner, that person for you and your family, that person in different ventures and things. I think that’s one of the things, Joy, that when I look at the stories about the women. And then when I look the one that we did about atomic Angel group. Like, there’s such humility in that. And I just want to just, like affirm, encourage, celebrate that. Like there are people when I think about doing DNA and I think about the humility of that story in like, how Dana just breaks it down to say, hey, we stepped in this major wealth event and it scared me and it paralyzed her. And she tells the story of like every decision, like, do I buy, you know, is it window treatments? Like, is it this car, is it this trip, is it this whatever. And she talks about that. But then she talks about the point where they found another couple. I think it’s April Chapman and her husband that then started this conversation where she felt safe and she felt they both felt safe having these conversations about things that are otherwise off the table in church. And I’m just so grateful for that story because it’s fun to see the progression of the movement, or in some ways, the collective words of the movement go out, and then they come back, and they come back in a form that’s so much richer than the way that they went out. And it’s because of that humility, it’s because of that authenticity. It’s because of that vulnerability that we’re able to say, oh, that’s what this looks like to get in a game that’s more accessible than I ever thought it was, that’s more joyful than I ever thought it might be able to be. And so I’m just so grateful for Bill and Dana in that story. And of course, then the Potomac in January, maybe we’ll get more into that. But it is just fun to see leaders of the movement, the humble heroes, taking this movement deeper by their authenticity, in their vulnerability.

Henry Kaestner I think through the grace of God and great content team, I don’t know, we’ve done 120 stories or something crazy. I mean, a lot. The team has been prolific, by the way. You can find most of our videos on the faith driven, itinerant feature of an investor video library sites, and you can get a sense for this. And yet and maybe it’s just because it’s a recency bias. I think my favorite story that we’ve ever done, definitely a feature of an investor is Bill and Dana Westerman, because it’s so raw and it’s so real, and it talks about being in partnership as a couple. And there’s a line in there. She’s like, and I didn’t want to be bullied, right. Because I see that in my relationship with Kimberly, because we’ve at different times, we’ve been at different places along our generosity, journey and generosity can sometimes get conflated with fate driven investing. And part of that’s good, part of that’s bad. The generosity part is helpful because that’s what taught Kimberly and I both that God owns at all, and that that’s not bad news and giving is a part of that. But then also is investing and so is our lives in our time. But I know that different times I’ve been ahead of Kimberly on the generosity journey, and there have been times when she’s been ahead of me. Where is it point in time where we had a second home that we really loved, and yet we really were excited about making a gift to ministry called Hope International Microfinance. And it was Kimberly that suggested that we sell the house. So it doesn’t mean that I’m always even though this is kind of what my vocation is, doesn’t mean that I’m always the one in lead. In some cases, she’s the one in lead. I was a little bit more excited about holding on to that than Kimberly was, but the investing side is something that is just altogether it’s different and it’s beautiful in there, can be really productive and participate in seeing other things grow fruit on other people’s trees. And that happens too, with giving. But this concept of innovation and taking what’s wrong in the world and using for those of us who come at this with an entrepreneurial background, just the creative process in coming up with an innovation that fixes what’s wrong in the world, either to return us to the Garden of Eden where things were really, really perfect or to bring about the New Jerusalem is something that’s just really powerful. And you get this tension and you get to see the sense at one point in time, Dana was behind Bill in this journey, but then she kind of goes out in front and just is able to just really get the sense of this, the beauty of it all. So it’s just such a beautiful story. I shouldn’t wax so long on that one. But I think that as people go through the series and see that Bill and Dana worked in story, they’ll identify with it. They’ll see the fact that’s so important that we do this together, and they’ll get a sense for just the challenges, but also the opportunities as well.

Justin Forman You know, I think it’s beautiful to look at the power of the stories. It’s beautiful to look at so many partners today would be remiss to not mention so many great ministries and partners and friends in the space. From generous, giving and generous, you have a national Christian foundation and so many the hosts of these watch parties. Nothing. I tend to think what they set in motion by their faithfulness and obedience and catalyzing movement in their city. And so encouraging to see that. I think one of the things that I would also before we kind of maybe move to the kind of some of the next ideas, is like, where were we challenged from this event and where were the things that we felt like maybe we got feedback on and said, hey, where do we go? Further still? And I was struck by one comment that somebody made about just saying, okay, there’s. Some stories and some great things that talked about gospel proclamation and talked about sharing the why, what we do. And I think collectively as a movement and as a ministry, there’s a challenge for us to say, how do we make sure that we don’t just rap, either great results or great impact or social side of things, but we don’t miss the opportunity to share the why that drives us. The story, the words weaving the gospel threads into this conversation. It’s tough at times. It’s tough as in faith to an entrepreneur. And sometimes it’s even, I think, more difficult for the patron investor. But I think that’s a challenge into growth area for us as we tell stories and content. But I think it’s a growth area also for the movement, for us to say, what does it look like to make sure that we don’t work so hard to get to that place and then miss the opportunity to tell that? Why?

Henry Kaestner Yeah, I’m trying to think about you. Get me going with what kind of feedback did I get about the conference and what’s next. And the thing that is really our greatest challenge, I think, in the movement over the course of the next several years is developing the third leg of the stool. So many people want to get in the game, and yet for good reason. We’re working with financial advisors who are trusted, fiduciary, who are working with us to help us to understand our need for income or our tolerance for risk, or the different places where we feel called. And that’s a really valuable part of the ministry. There’s some number of people come out of the faith driven investor group who then go ahead and are able to get right in the game, and they see a list of 35 different fund families that are on the feature of an entrepreneur marketplace. And they’re like, okay, I want to go ahead and pick some that are in real estate, some that are in emerging markets, and some of them are private equity, venture capital. And I’m used to making my own investment decisions. But most of the way that people steward wealth is with working with an advisor, and for good reason. That’s a really important role in society and the economy. And I’ve been encouraged by and this is a difference, I think, between this year’s watch party and conference and the year before is that more financial advisors were hosting and involved in watch parties and are starting to develop those arrows in the quiver and just acknowledge the fact that that’s difficult to do. So many of the ones that are working with wealthy people have been doing this for 25 or 30 years. So for them to change and go ahead and onboard new fund managers and to do the discovery and diligence behind thinking about, gosh, now I’ve got to go ahead and onboard another 5 or 6 different fund managers because I want to have something in real estate. I want to have more arrows in the quiver, so to speak. That’s a lot of work. And that’s the number one thing. I think that the movement needs are more advisors to come in and say, you know what? We see that there’s an opportunity to start an investment capital way that builds God’s kingdom. We’re going to go ahead and do the work to onboard some of these new funds, understand what’s right for our clients, and then we’re going to commit a part of our practice to helping people to understand not just how they can make more money, just to give it away, but how in the process of investing the capital that they need for retirement or for college education or whatever might participate in work, that guy’s burning Kingdom right now. And yeah, some of it could be negative screen stuff, which is, you know, just making sure we’re not investing in pornography and gambling and some of the other things that some of the big name companies are involved in. But more importantly, I think what positive screens, what investments might we make that would allow for flourishing both on the private equity and venture capital side and real estate, but also on the public markets? That’s the key part. That’s what is not completely there. Hopefully there are some listeners to this podcast who like, you know what, I get it. I see that there’s going to be market demand. More and more people are coming out of faith driven investor groups who want to get in the game, and I want to help them be that river guide.

Joey Honescko Yeah. As we come to a close here, I’m thinking we touched on heart change. We’ve touched on the opportunities in the movement. Now we’re talking about some of the barriers of the movement. I would love to end this here thinking about what are the hopes for the movement in 2024?

Justin Forman You know, I mean, that could go so many different ways. And it’s such a big, broad movement that it’s going to be hard to even scratch the surface of the whole thing. But if I were to reframe that and say, what is one of the things you’re most excited about in this season? And to build on some of the things that Henry mentioned when you talked about the partnership and recognizing that this is a decision with him and Kimberly. And then when I think about like what Henry is talking about with the River guides, I think one of the things that we just continue to be reminded of is that this journey to faith driven investing, it’s not a sprint, it’s a marathon. It’s going to take a lot of things, and it’s going to take several key partners. It’s going to be making sure that you’re reunited at home and that you’re connected, united, something different, but something similar with your advisor. And I think that one of the fun things that I’m really looking forward to is that we have this new project releasing, and Brooke and Luke Roush can talk through their journey. And so that they it’s broken and kind of talk through it and just talk through their journey of like being in this space, but then also going there as a family themselves. And I think that that’s going to be just an incredible tool. Do something that couples can go through with other couples individually. But I think it’s just going to be a key step in the movement to uniting a home, uniting a family and saying, hey, this might take some time from us to get where we are from, where we are to where we want to go, where that’s calling us to go. But it’s such a needed one. Like if you want to go nowhere, try and go somewhere alone. If you want to go somewhere far, you know, go together with your spouse. And I think that that season is it’s a fun thing that we’re recognizing that like, these are needed conversations that have to happen. And it’s one we’re right on the edge of.

Henry Kaestner Yeah. And a further that, my hope is that husbands and wives get together on their knees and just ask God how he would have them steward their lives, but yes, their investment capital in their financial resources. That’s the big win. That’s the thing that can happen right now. I remember as we were getting started with FDI, maybe 6 or 7 years ago, as were coming up the idea, I think the first conference might have been five years ago, but a friend of mine named Ben Shelf was looking through the white paper we’re putting together and sort of kind of our plan of action, and one in which we talked about one of the big challenges was that there wasn’t enough supply. Now, five years on, there’s a lot of supply. There’s a lot of fund managers that committed themselves to their faith and written spiritual migration plans and big multibillion dollar funds and new funds and all that. So supply is not a problem. But Ben suggested there was supply wasn’t a problem before either. He said. It’s not a problem of supply and demand. It’s a problem of us just not asking God intently about how he would have a store to camp on. The example that he had, and not a bragging way, was that they had gotten a big windfall from selling a company that he owned, and so he got down on their knees and they said, God, we have no idea how to invest this capital. How much of it should we give? How much of it should we invest? But we know it’s all yours. So we ask that you guide us in the next week. Somebody that he knew who’s on the board of, I think it was InterVarsity or just a larger organization who had had a good presence in the Bay area, was getting evicted from their building that they’re in. So they went ahead and they bought a building to house this ministry. And it was a financial you know, the ministry had been paying rent before. And so they continue to pay rent. And so Ben and his wife were able to make a fixed income type of return in a way that was a great blessing to the ministry. And God answered that prayer. And that’s the big win. The big win is just asking God lead us with hopeful expectancy that he will. But I think that more than anything else, God just wants us to be in relationship with him. And too often I haven’t asked God about how he would have me make any one of a number of decisions, but way too often it’s financial. And when it’s financial. In the past it had been about giving or how much to give, but he did not until recently ever been about how would you have me invest? I just made the assumption that God wanted me to invest and make as much money as possible, and I just I never asked him. And that’s the big win for 2024, is that more and more couples will get down on their knees and ask, God, how would you have a steward of capital? And there are a lot of listeners to this, to be clear, that are single. It’s just that we want to make sure that for those who are married, they don’t go, this, this is not a single player sport unless you’re single and great. Being with you guys always is.

Joey Honescko Always a pleasure. Thank you Henry. Thank you. Justin. Justin, you said that phrase scratching the surface. And I think that’s what this episode did. We’re going to dive into a lot of these topics in more detail over the coming weeks. So keep up with the show. Check out the website for those videos and those resources that we’re talking about. And, we’ll see you in two weeks. The next show.

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The Faith Driven Investing Movement always starts with heart change, but it shouldn’t end there. Christians are called to take action. We put our hands and feet in motion in response to God’s transformation in our lives.

A lot of Faith Driven Investors believe that, but many of us struggle with a practical question.

Where do we start?

This is not a prescriptive or presumptuous movement, but in this podcast episode, we want to hone in on some of the themes and ideas people have been talking about this year and give you some practical and actionable takeaways.
John Coleman will join Richard Cunningham for an in depth look at how investors around the world can start to get in the game.

Episode Transcript

Joseph Honescko: The faith driven investing movement always starts with heart change, but it shouldn’t ever end there. Christians are called to take action. We put our hands and feet in motion and response to God’s transformative work in our lives. A lot of faith driven investors believe that. But many of us still struggle with the practical question where do we start? We never want this podcast to be hyper prescriptive. But in this conversation, we do want to hone in on some of the themes and ideas. Leaders around the movement have been talking about at various gatherings this year, and we want to give some practical, actionable takeaways. John Coleman will join Richard Cunningham for an in-depth look at how investors around the world can start to get in the game. You’re listening to the Faith Driven Investor podcast. Let’s dive in.

Rusty Rueff: Hey everyone. All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosted guests may maintain positions in the companies and securities discussed. And this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham: Well, hello everyone, and welcome to the Faith Driven Investor podcast. We are grateful you are tuning in from wherever you get your podcasts. Glad you’re here. My name is Richard Cunningham. I reside in Austin, Texas, and I have the great privilege and joy of serving on the Faith Driven Investor staff, and I am actually going to be your podcast host for the next season ahead of the FDI podcast. And if you’re wondering, whoa, whoa, whoa, where are my normal guys, my mainstays John Coleman, Luke Roush, Henry Kastner? Not to worry, there’s still very much going to be involved in the life and the future of the FDI podcast. We’re just shifting some things around here internally so we can actually hear more from them. I’ll kind of start manning the host responsibilities, and we’re going to move folks like John Luke Henry into that color commentary, expert insight and kind of guidance role as they have just so many years of experience across this FDI space. And so we’ve got John Coleman here with us today. And John thrilled about this new season of the FDI podcast. And welcome. And I know you’ve been on the road a lot. Everything going well?

John Coleman: Well, Richard, I’m doing pretty well. Although I would say FDI listeners should know that despite Richard’s kind introduction and thoughtful introduction, this is a coup. It’s actually quite tense on the podcast right now. I only wish you knew. Now, Richard, I’m really excited for this season. Obviously, I’ve known Richard for quite some time, and, it’s just such a privilege to get to work with him in this new season of the FDI podcast. And I can’t wait to dig into the topics that we both care about. Invite some great guests on. So I’m very much looking forward to the road ahead.

Richard Cunningham: Absolutely, man. So we’ll call this episode one phase one of the coup. That is our play here.

John Coleman: The revolution.

Richard Cunningham: That’s revolution. So so yeah, recording this at the end of February 2024. And John, today we’re hitting on man, it’s been a red hot start to the new year in the faith driven investor landscape. And specifically there’s been some seminal events that have taken place. So today specifically, I think we kind of want to hit on. Whereas Justin and Henry last week talked a lot about the heart posture themes that came out of each of those gatherings. Today, we want to pull out some of the threads in the themes, specifically from the FDI conference, kind of talk about some of the tactical, practical applications of them. It’s a John. We’re going to spend most of the time teeing up some topics for you. But before we start diving into the conference and some of those threads, just generally speaking, your thoughts on just all the momentum in the hot start we’re off to here in 2024?

John Coleman: Yeah, I’m really encouraged by, you know, I’ve only truly been a part of the faith driven investing community for three years now. I actually just had my three year anniversary at Sovereign’s [Capital] this week, and before that, I was kind of aware of some of the dynamics but not fully invested in those. And I would say there’s been almost a step change in the level of engagement, the quality of engagement, and the breadth of engagement around faith driven investing. You know, the FDI, conference, broadly speaking, was very broad. Tons of direct investors, very global, a lot of high net worth investors and institutions, a mix of asset managers, the FDI fund manager gathering for those not familiar is really about professional investors, fund managers. That was in Palo Alto hosted this year as Richard had a lot of venture capitalists, private equity folks, real estate folks. But this was a session for those who are every single day living and breathing the professional investing world from big firms like some of the mainstream firms that you would know, to specialist firms like ours that are in faith driven investing and in Kingdom advisors. You know, it’s kind of the Super Bowl of the faith driven financial advisor community. And it’s just always an encouragement. They had several thousand people this year. They have this massive exhibit hall. They’ve got these great mainstage speakers, and there you’ve got several thousand wealth managers, financial advisors coming together with asset managers like us with other third parties trying to think through. How do they get their clients in the game for faith driven investing, and how do they counsel their clients with biblical wisdom? Right? Which is also an important part of the advising thing. So I was deeply encouraged on all fronts, although, I would like to travel a little bit less. So if we could have fewer conferences over the next couple of months, that might be better.

Richard Cunningham: Yeah, we we certainly start the year off hot, to say the least. So let’s go specifically to the first of the gatherings we were talking about. The FDI conference kicked off with Luke Roush, your managing partner with you at Sovereign Capital, Henry Kaestner, also Sovereign Capital, talking about this idea of, hey, when you are done with today’s conference, hopefully you’d be able to see that faith driven investors are at work deploying capital in predominantly one of three ways for market rate return, for concessionary and maybe impact investing, as often has been referred to or deploying for philanthropic or just pure giving purposes. And so when you hear that, why was it so important that Henry kicked off the FDI conference kind of through that lens?

John Coleman: Well, I think especially given how much we talk about the values of faith driven investing, anytime you talk about values investing, it’s very important to clarify with those with whom you’re speaking, where you stand along that spectrum. Right, because you do want to be honest and transparent about the return and risk profile that you’re seeking alongside those values. And there’s a legitimate spectrum from pure philanthropy to pure high return investing, whatever asset class that is that you can what you just need to be transparent about where you are on that. I think we’re values based investors, whether Christians or advocates of ESG get into trouble, is when they claim to be investing with the values lens in a way that doesn’t dampen returns. But in fact, there is some structural reason why returns will be lower, and there’s no problem with that if people want to make that conscious trade off. But you got to be conscious of that trade off. And in fact, as professional investors, you then have to be thoughtful about what you can accomplish along each of those points in the spectrum, because I’m a big believer that the private sector can actually solve many of the problems in the world. I think that philanthropy is suited to certain types of problems, but not others. And so we’re constantly trying to think through how can we use market capital to solve the world’s greatest problems rather than philanthropy? But there remain things that have to be philanthropic, right? And it’s important to identify those and figure out how we fund those and put capital against them. And in fact, Jesus called us very directly to engage in those charities, right? For the poor, for the widow, for the orphan, and those those causes still hold true. There are another category of investments that we could get into, things like, charter school financing, for example, maybe low income housing financing and certain constructs that do have a return profile. But you’re making something of a conscious trade off on that profile in order to have the type of impact that you want to have for the risk return profile that you’re getting. And we firmly believe there are elements of the high return spectrum where you’re not at least seeking to trade off returns. You can never guarantee returns, obviously, but you’re seeking high returns alongside a deep integration of cultural values or redemptive mission, etc.. And so we always think as professional investors about where we stand on that spectrum and how we communicate that well to and investors. And I think anyone dealing in values, whether ESG or faith driven investing, really has to be thoughtful about that as well.

Richard Cunningham: John, you captured it really well. But I want to talk real quickly specifically about the story of Dana and Bill Westerman. And this is a situation where Dana’s father, about 12 years ago, left them an inheritance check, a meaningful inheritance check. That kind of rocked their world. And so, John, I think it’d be helpful if someone in your seat who interfaces often with LPs and investors of all sorts, when you see these kind of liquidity events or windfalls or moments like this across the faith driven investing ecosystem, what steps do people take initially? What pitfalls do you potentially see people fall into? Maybe contrast that a little bit with kind of some of what you see Dana and Bill do in their story?

John Coleman: Yeah, and Dana and Bill are such an inspiration. Right? They’ve been mainstays of the faith driven investing ecosystem. They’re one of those families who really put up risk capital to get into areas that innovate for faith driven investing. And so I personally just have a ton of respect for each of them. And I’m really grateful for the impact that they’re having. You know, it’s not uncommon that people come into large amounts of money. And one of the interesting things, Richard, is that when people suddenly come into big amounts of money, it’s often destructive, right? There are a ton of studies that show that lottery winners, after winning the lottery are more likely to go bankrupt, are more likely to suffer from various mental health challenges, are even more likely to take their own lives than those who haven’t won the lottery because they don’t have the habits, mindsets, values surrounding infrastructure to manage it appropriately. Becomes destructive for them. We see it all the time with things like professional athletes, right? A kid who’s never had financial resources comes into something. Or young person at 19 or 20 or 21 years old, they’re in a millions of dollars suddenly, and they just have no framework through which to manage that. There are people who try and take advantage of them all over, right? And they don’t have the infrastructure, other people, frameworks for investing that allow them to steward that well. I think, you know, if I offered some advice to fate driven investors, I think resonant with what Dana and Bill talked about. The first is to make sure right out of the gates that your heart posture is right with regards to these things. You know, we can talk about it further. The Bible is very clear that the love of money is the root of all kinds of evil, but money itself is just a tool. God actually bless the number of people in the Bible. Abraham was one of the richest people of his day, right? David and Solomon, were both extraordinarily wealthy, which actually led to the downfall of at least one of them over time. But that was a blessing as long as they used it for his purposes. And so really digging into what the Scripture says about the use of money and capital, thinking about the mindsets and values that turn that from a totem to a tool, they turn it from an idol to something that you use for kingdom purposes. That’s the first step, is to get that mental framework right, to really understand what you want to do there. The second is to be very practical about pausing. When you come into those resources and really thinking about what is the level of lifestyle that I need in order to live, and what is the level of lifestyle that I can live when I come into this money. And then secondly, you know, how am I going to steward those resources? I think Dana and Bill laid out a framework. For example, I believe it was 60-40 where they were going to do faith driven investing, where they think maybe I got that number wrong, but 60% of it in philanthropy with 40% of it, I believe, you know, some framework like that where you know exactly what you’re setting aside for philanthropy, what you’re investing for the future, and then within that investment and philanthropic pool, how are you going to determine the framework by which you’re going to distribute that capital, and who is going to be your partner in doing that? And that’s one reason I still think it’s incredibly important for most people to have a financial advisor, for example. Right. Someone who has total transparency to what you have, who can keep you accountable. And I think it’s important that person be values align like I have a financial advisor, even though I’m a professional investor, he knows what my will says. He knows what all is in my portfolio, he knows what our goals are, and he shares my Christian faith and my values. And so he’s equipped to step in and make sure that I’m living up to the standards that I established upfront, as well as offering me wise advice. And, you know, second person is speaking to that. And I think those elements are really important for anyone stewarding capital, but particularly if you come into that quickly.

Richard Cunningham: I mean, that’s really good. And I appreciate you bringing up the leg of the stool that is the outside counsel, the financial advisor, the outside wisdom. Appreciate your humility and sharing about your own. You also mentioned something when you said 6040 and you specifically spoke to faith driven investing versus philanthropy, but you say 6040 to start thinking asset allocation might be helpful to help people orient around this conversation of sometimes people think faith driven investing, they only think alternative markets. And there’s totally a lot of spiritual integration there. Other times they think, hey, it’s screening out sin stocks in the public markets, maybe talk about just for an investor out there listening in, asset allocation, a personal balance sheet and briefly kind of maybe orient people. Like how do you think about an asset allocation. It’s you know, it’s really hard to get to why if you don’t first know where you are at X. And I think that’s something you’re talking about is taking a moment, stopping, pausing and understanding. Hey, God, we want you to use these things. But we first need to kind of reflect on, hey, where are we currently?

John Coleman: Yeah. And you know, Tim McCreadie got into some of this later in the conference as well. So I’ll kind of blend some thoughts from the two of those I think. Yeah, yeah. There’s the basic topic of asset allocation. You said 6040, which is the classic stock bond portfolio that people talk about. Right. People used to recommend the average person should be 60% stocks, 40% bonds, etc.. The truth is that asset allocation is just a framework by which we think about how to put our money in different instruments stocks, bonds, money markets, bank account, cash depository institutions, alternative investments based on a few things. Our risk tolerance, right. Which is obviously quite important. How much risk can we take our timeline for investing? Am I 20 years old or am I 90 years old? How long can these assets stay put where they are and our liquidity needs at the very least, right? Which is how much capital do I need now? Which is why most people aren’t 100% in private equity, for example. Right. Which is quite illiquid. You know, I might need some cash now for daily living, for emergencies, for things like that, or to meet my liabilities over time. That’s the basic type of asset allocation. Usually work through that with a financial advisor or even if you’re an institution like I sit on a couple of endowment ICS and we constantly think about what is the asset allocation that matches our lives. Abilities so that we can make sure that we support the institutions those endowments are intended to support in a proper way. And we have consultants who help us think about that in a very rigorous, analytical and quantitative way. And that looks different for someone with $200,000 or $200 million. But each of us have to pick that. I think in the same way, we’ve all got to think about our asset allocation within faith driven investing to the types of points along that spectrum that you and I talked about at the beginning of this call. I think it’s really healthy to have giving goals, for example. So the tithe, that’s the most basic example of that in the Bible, which Dana and Bill talked about as well. But for many people with a lot of financial resources, you can actually go above that tithe, right? You can set aside a bigger pool of capital, or you could even have a goal that, you know, over time, you want to give away as much as you spent, right? And you set a number for that for your lifetime goal, saying, I’m going to give as much as I spent over the course of my life. So something like that where you deciding what your philanthropic capital is and then based on the capital that you actually need to support your lifestyle versus what’s in philanthropy, you’re choosing, where do I want to play on that spectrum of concessionary returns, of high returns? How comfortable am I taking high risk? You know, typically people with more capital are better able to take big risks, and that has tactical implications. And so you have to start thinking about based on your own profile, where are you going to play. I think that deciding that upfront and pushing yourself to think about impact, equivalent to the financial returns you want to get, is a really important part of that equation, though, because it’s very easy to default into just doing a me two portfolio what everyone else would do. And I think for us, we have to be reminded that we’re called to steward that capital in a dramatically different way.

Richard Cunningham: Yeah, I’m really glad you talked about that, and I’m glad you brought up Tim McCreadie too. So Tim, to kind of catch up here speaks later on in the conference. And he does a wonderful job of essentially kind of making the point that, hey, the product on the shelf, the momentum in the movement, the number of assets that are pouring into faith driven investing, the excuses are starting to go away one by one, for why someone would be hesitant to step into faith driven investing for a long time. And John, I’ll have you riff on this real quickly. It was, well, hey, I’m not an accredited investor. And so for legal reasons, there’s no reason I could ever be involved in the faith driven investing movement. But what’s coming to bear is remarkable opportunities in the public markets for your everyday retail investor to lean into faith driven investing and financial advisors are receiving more and more product outside expertise consultation that shows them well. There is competitively cost effective products with competitive returns for someone in their everyday stocks and bonds portfolio. Speaking of that kind of asset allocation to access faith driven investing, and then I would hope that anyone hears this and says, hey, this is a conversation I can have with my financial advisor or this as I engage at work. Maybe you work in the asset management space or the financial services industry. You can kind of start to push the line a little bit and say, hey, have we thought about mainstreaming, if you will, the concept of investing that is inspired by our Christian values? ESG certainly pushed to the forefront and found its way kind of, you know, at mass, it feels as if because of the number of Christ followers out there, this is something where there can be ground up demand that causes the intermediaries to act.

John Coleman: Yeah. That’s right. And when we communicate that with the intermediaries, I don’t think they’re bad people or anything like that. It’s just this structural kind of momentum of intermediaries. Right. They’re typically cautious and conservative with their clients assets. The ESG or mainstream values investing framework is a helpful one because they’re accustomed to that. They already make exceptions for values based investments within frameworks with which they’re more familiar. What we can now push on is to say, hey, this is just a different category of values based investment. It’s important to me, and I’d love it if we could begin to at least explore adding some of these options to the platform. And it’s easier to start with things like ETFs and mutual funds because they’re more broadly available. But that can extend to private equity, to venture capital, to real estate. And I’ll tell you, Richard, you know, one of the encouragements to me is I am seeing quality, faith driven options now in almost every asset class. You know, one of my propositions coming in with Henry was there are very, very few asset classes that can’t be done with some element of spiritual integration. I’m not sure what that looks like for gold. I know there’s a very vibrant debate about Bitcoin, but you know, for the vast majority of stuff stocks, bonds, real estate, private credit, direct lending, asset based leasing, music, REITs, movie studio content, investment, venture capital, private equity, all these different things that we think about. I’m seeing emerging opportunities to do it in a faith oriented way at one level or another, and I think that’s quite exciting to me as well.

Richard Cunningham: Absolutely. Really well said. Well you tee up a good kind of transition. And so we’re going to move a little bit down the balance sheet here and kind of go from one asset class to the next as we did that in the conference. And so now here we are in the real assets kind of category. Chuck Welden of WeldenFields and his real estate investment company has really spent some time thinking on, hey, what could spiritual integration that term, John, we’ve used number of times look like in our multifamily real estate investing. And so we’d love to invite you just I know Sovereign’s has some real estate kind of activity inside of what you all do as an asset manager. Have you kind of speaking to this particular asset class for a moment?

John Coleman: Yeah, and getting to know Chuck over the last few years has been a joy. Obviously they’ve got WeldenField, but he’s also been instrumental in Lion’s Den.

Richard Cunningham: Oh great. Call out in.

John Coleman: A number of other just pieces of infrastructure in the faith driven investing movement. And in many ways, he’s been right there, shoulder to shoulder with Rob West and with Henry Kaestner and with Ross Robinson and so many others who’ve just been in this for the long haul. And it pioneered it. And so my respect for Chuck as a person, it’s just extraordinarily high. I think real estate is one of the most interesting areas that faith driven investors should be thinking about. If you think about the context of real estate, you are operating in a space where you touch individual people a huge percentage of their time, or in commercial real estate, you know, where you’re getting people or even industrial where they’re producing things. You have this opportunity in the lived environment to be where people are all the time, right? To really people that are one of the greatest callings that we have in the Bible. Is hospitality, right? For strangers, for enemies? We are to extend love and hospitality and greeting to those people. You go all the way back to the Old Testament and just think about the people who were spared because they invited strangers into their homes to provide them protection. You think about the way that Jesus behaved, inviting people in when his followers were gathering. You think about all of these examples. The Good Samaritan, if someone who was willing to take someone in, who was willing to take them to an end and take care of them, another opportunity for hospitality, right? I think real estate is one of these exciting areas where we get to practice our faith deeply in a lived environment that contains people for such a huge percentage of their time. Multifamily, I think, is particularly exciting for that reason, you think about the opportunity to welcome in people who are often in unstable situations, and yet through their lived environment, you can try and provide a safe space. Surround it with people, including the property managers, those who are working the property, even the maintenance staff, the folks working landscaping. You can prepare them to extend Christian hospitality to these people. There are these opportunities to take people where they live, and instead of them having to go seek out hospitality, and instead of them having to randomly run across this idea of Christian love, you can bring it to them where they live. And so I’m extraordinarily excited about that.

Richard Cunningham: Man. Really well said. One of the things to the faith, true investors listening, who maybe aren’t in the real estate space but are thinking, I’d love to see some of these fund managers. That’s John talking about. Or just like, look at a website and see how people are communicating this. That’s the beauty and FDI groups and that’s the beauty. And just kind of poking around our website is you’ll bump into some of these names. And so now we’re talking culture and entertainment. But John, you actually conducted this interview in the FDI conference with Dallas Jenkins. And one of the things you guys talked about is so much of what happens in our world is downstream of what we see in the arts and what we see in entertainment. Talk about that more. And what Dallas Jenkins, creator of The Chosen, has done. But just more broadly, I think when people think of faith driven investing, they think of what we’ve talked about today stocks, bonds, real estate, maybe some one off private equity fund manager. They might think of crypto or something like that, but they don’t think of entertainment or movies or values investing in that regard. So maybe help kind of people look at this asset class.

John Coleman: This is one that’s kind of a personal hobby horse of mine. I’m super impressed. I love it. You know, I think there are very few things that Christians could do to influence the culture for human flourishing. Then create culture, movies, television shows, music, the written word books, you know, all of these sorts of things. You think about it. The United States in particular, exports almost nothing else as much as culture, right? You go everywhere else in the world, and you are listening often to American music and movies and TV. We are surrounded by it. Your kids, between that and social media, are spending hours and hours a day in front of these things. It is having as great an influence on our ability to flourish, our ability to come to know truth, and just the way that we think about ourselves in the world around us as anything else. And again, it combined with social media in particular. And so I think Christians have an obligation to be engaged in culture. I think historically, Christians have done, at least in recent history, a reasonably poor job of that. We often haven’t made product. That’s it, the quality standard of the mainstream product that was out there. And that, honestly, is one of the things that was so revolutionary about the chosen and what Dallas did with The Chosen Dude.

Richard Cunningham: I think I’m betting a thousand on crying during every episode. Just oh my gosh.

John Coleman: And you know, we rewatch all the episodes. We make our kids watch them with us and they love watching them, right? Because they’re really good. And that’s the test, right? When your kids want to watch something with you, because my kids would love to go watch all these other things because they’re good, they’re really good, and we want to make content like that. And I think Dallas has really done that. I’m a huge fan of a guy named John Erwin who’s done that with Jesus Revolution and American Underdog. And I think there are an emerging set of opportunities to invest in that type of culture that are really taking off. One of the ones that we did, and I’m not trying to promote us recently, alongside a number of others, was Help John and Dallas launch a new movie studio called The Wonder Project, which is intended to do exactly that. They’ve recently announced a partnership with Amazon. They’re producing a TV show now called House of David that will hopefully do for the story of David. What the chosen has done for the Gospels is the aspiration. It’s also kind of a cool story. It’s going to be like Lord of the Rings or Game of Thrones for the story of David, which I think is really neat. And we think that just like The Chosen that can reach hundreds, millions of people, the chosen is such a hundred million people. But in order to do that, you need capital because this stuff is expensive. Go look at what Netflix or HBO or Amazon or any of the studios Lionsgate are putting into movies. You know, they don’t cost $1 million. An independent film will cost 15 to $30 million. Some of these giant studio productions are $200 million or more. So they take serious capital. And that’s why I think Christian’s opening that up as an asset class to invest in beginning to Marshall Capital, conscientious, as long as the creators can match that with great creation is an exciting opportunity. The scary thing about the space is a lot of folks have gotten burned there historically because it is a different type of investing, like venture capital. There are winners and losers. You really have to understand the industry in order to do it well. And that’s why I think professional investors who are faith aligned, getting into the space is essential right now, because it is easy to get the economics wrong. If you’re not familiar with the studio system, Dallas and John are obviously quite familiar with that. So they’ve been able to craft something that I think can be positive for investors. Other creators can too, but I think professional investors leaning into the space, starting to raise funds, really learning the system and helping individual investors and institutions get in the game is important. And as I think about the impact investing side, you know, somewhere in between kind of high return and philanthropy, there are very few things I think we could be doing that would touch more people and help to make their lives a little bit better every day.

Richard Cunningham: Man, that’s fun to hear you talk about. And, you know, you mentioned John Erwin’s name, and this is someone we’ve had on multiple faith driven investor events. Speaking of conferences, just so much of what they do is of such excellence. So I’m going to go on a little bit of just a kind of rampage here to close us as I look at the remainder of the conference and just say we went to emerging markets, something near and dear to one of the feature investor founders, Hearts and Henry Kaestner. And we showcase the story of Christeen Rico and how she left an executive level role at Apple and moved to her birthplace of the Philippines to start an accelerator and joined up with the venture capital fund. And then Tim Macready kind of reigned us back in and said, hey, it’s not just about the alternatives market. There is an opportunity, as we’ve kind of hit on here, to think about the mainstream implications and opportunities of faith driven investing in your traditional asset allocation and your stocks and bonds portfolio. As you look to Stewart ETFs and mutual funds as you need liquidity. And Tim did a great job. And we’re going to have him on the podcast here in the weeks ahead. Talking more about his research around growth of the movement, the products available, some of the spiritual integration metrics he’s looking at in his team at Brightlight are looking at. And that was great. We showcased a wonderful story of green hope out of Indonesia with Tommy Tjiptadjaja and Sugianto Tandio, which was just super powerful talking about investing and partnership. And I want to tease this one out a little bit as our final story was a practical hey, what next for faith driven investors? And it was the story of Potomac Angel capital. And we’re going to have Patrick Farrell on our very next faith Driven investor podcast talking about Potomac, the application of investing in community, not going at this alone, and the opportunities at play for spiritual integration as you think of really early stage investing and partnering with entrepreneurs and incubation in the formation of their companies. So with all that in mind, John, before we sign off here, as we think about this next season, season’s FDI podcasts, any closing remarks or thoughts from you?

John Coleman: Yeah, I would just say to this community, first of all, be really encouraged by what’s happening in the marketplace. There is a lot of innovation happening. We talked about some of it today. You’re seeing it at the FDI. I mean, the FDI fund manager gathering, Richard, which we didn’t talk about too much. We had investors from some of the biggest venture capital and private equity firms in the world, CEOs of some of the biggest asset managers in the world who are Christians, who are trying to think about redemptive uses of their capital that may look a little bit different than Sovereign’s. It may not be able to go quite as far in some of those institutions as we would go on the spiritual integration. Inside, but we also have to let a thousand flowers bloom. And it’s important that people get engaged where they are. I think secondly, I would encourage people to not let the perfect be the enemy of good. I think it’s easy to throw up your hands if you can’t do your entire portfolio is faith driven, or if you don’t know how to do that and say, well, I’m just going to stick with what I got, not do anything. And my point of view is like, just dip a toe in the water, get started with one thing, move cautiously and deliberately. Do a second thing once you get comfortable with that. Just get in the game. Start trying to do it thoughtfully. Get an advisor who can help you do that in a way that doesn’t sacrifice returns. It keeps you safe, and then spread the word. We talked about spreading the word to gatekeepers, trying to get them more amenable. We want to get the word out about FDI and FDE, certainly just so more people are engaged in the movement so that more folks are considering doing this with their capital. But spread the word. And certainly as we launch into the next phase of this podcast, we would love your feedback on how to make this as engaging as possible. You know, we want to make sure we’re telling stories that are impactful, that we’re giving people educational materials that make a difference, that we’re making the faith driven investing ecosystem practical for people that they can actually get in the game, Richard. And it’s not just a hypothetical. It’s not just theory. And we want you to push us on who you want to see on this podcast, what topics you want to see, what things are confusing, what we can help clarify, and how we can make this as engaging as possible so that we can be a part of that movement that you all really you all are leading.

Richard Cunningham: Yeah, absolutely. Really well said. John. This is a movement that is led by those of you actually out in the field. And John, you said a key phrase that I’m so pumped that you said because it was the theme of the overall 2024 FDI conference, and that was get in the game. Take that opportunity to go from spectator, go from passively kind of digesting this, like you said in theory and moving it into practical application. And it’s just one fateful step at a time. This is not prescriptive or presumptuous. This is in faithful obedience. And Joey Honescko, our producer behind the scenes, reminded me that, hey, if you ever to John’s point, you have that suggestion, you have that guest we need to talk to podcast at FaithDrivenEntrepreneur.org . So John Coleman, thank you so much for your time today. We will see you folks next time with our good buddy Patrick Farrell on to talk about Potomac Angel capital.

Henry Kaestner: We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have, and find great community as they do so. There’s no cost, no catch in person or online. You can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter at faithdriveninvestor.org . This podcast wouldn’t be possible without the help of many of our friends. Executive Producer Justin Foreman intro mixed in, arranged by Summer drags. Audio and editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb.