FaithShares Trust, an Okla.-based investment company, has launched three faith-based exchange-traded funds that will invest in large-cap domestic names through a religious denomination screen.

The funds will be the first ETFs to target the Christian faith. They are:

• FaithShares Catholic Values Fund (NYSEArca: FCV)
• FaithShares Methodist Values Fund (NYSEArca: FMV)
• FaithShares Christian Values Fund (NYSEArca: FOC)

Come Dec. 15, FaithShares will launch two other ETFs to complete the lineup: the FaithShares Baptist Values Fund (NYSEArca: FZB) and the FaithShares Lutheran Values Fund (NYSEArca: FKL).

The funds will track equally weighted indexes composed of 100 securities drawn from the 400 largest companies in the U.S. According to Tom Phillips, president of FaithShares, the choice was made to use equal-weighted because extensive performance analysis on the S&P 500 showed that an equal-weighted portfolio consistently outperformed a market-weighted one.

Companies included in the portfolios are evaluated through a rules-based screening that seeks to eliminate all of those that operate in industries prohibited by each denomination, which include in some cases those involved in alcohol production and sale, tobacco, gambling, pornography and weaponry.

The screening also seeks to include companies that pursue social responsibility practices such as community development and environmental sustainability.

Among some of the 100 names included in the baskets are companies like American Express, Starbucks Corp., Aflac, Motorola Inc. and Microsoft Corp.

Phillips said that one of the main reasons for the choice for an ETF structure was transparency. While portfolios will only be rebalanced annually, it was imperative for the company to provide investors with full access to the holdings at all times.

Given the similarities between the denominations, about 70 percent of each ETF’s portfolio will consist of the same group of securities. The other 30 percent is where the ETFs will differ from one another.

Phillips pointed out the differences by explaining that, for instance, while the Baptist ETF will bar all alcohol producers, the Catholic ETF will decide on a case-by-case basis and the Methodist ETF will only invest in companies that have less than 10 percent of their revenues coming from alcohol production.

From a sector standpoint, the FaithShares ETFs have similar sector allocation to that in the S&P 500.

The FTSE Group is behind the customized indexes benchmarking the new ETF offerings. The custom index series includes:

• FaithShares Christian Values Index
• FaithShares Catholic Values Index
• FaithShares Baptist Values Index
• FaithShares Methodist Values Index
• FaithShares Lutheran Values Index

The ETFs will charge 0.87 percent in annual expenses, which is on the high end for an ETF. Phillips said those rates are still very competitive in the segment of religious-based offerings, which currently would include mostly mutual fund vehicles. He also pointed out that they hope to lower those fees once the ETFs gather assets.

FaithShares will donate 10 percent of net income from the funds to large ministry organizations associated with the respective denominations. The company has not yet determined which ones.