GLRY: Momentum ETF With Biblical Values

The Inspire Momentum ETF (GLRY), an actively managed fund focused on companies aligning with biblical and ethical values, has outperformed its mid-cap benchmark (IJH) over the last 6 months but underperformed since its inception in December 2020. GLRY, which has a concentrated portfolio with significant exposure to technology and industrials, has the highest expense ratio among faith-based ETFs; while it has recently performed well compared to other biblical value ETFs, the FIS Christian Stock Fund ETF (PRAY) exhibits a better Sharpe ratio and lower fees.

Analysis

The Inspire Momentum ETF (GLRY), an actively managed fund launched in December 2020, seeks to outperform the U.S. stock market by investing in companies adhering to biblical and ethical values that also demonstrate strong recent performance. The fund's portfolio comprises 34 U.S. companies, with a notable concentration in small-caps (54% of asset value) and mid-caps (31%), and significant sector exposure to technology (24.4%) and industrials (21.4%), leading to an overweight in these areas along with consumer staples when compared to its S&P MidCap 400 Index (IJH) benchmark. Fundamentally, GLRY exhibits growth characteristics, trading at higher price/book and price/cash flow multiples than IJH, while price/earnings and price/sales ratios are comparable; it also reports higher aggregate growth rates, with the exception of cash flow growth. GLRY's performance history is bifurcated: it has underperformed IJH by 1.45 percentage points on an annualized basis since its inception, accompanied by higher risk as measured by maximum drawdown and volatility. However, over the last six months, GLRY has significantly outperformed IJH by 7.2 percentage points. Within the faith-based ETF landscape, GLRY carries the highest expense ratio at 0.80% and a high portfolio turnover rate of 82%. While it has matched or exceeded peers like TPLC and PRAY in total return since October 2023, it has done so with greater volatility, and the FIS Christian Stock Fund (PRAY) offers a superior Sharpe ratio and lower fees. The article underscores that GLRY's fees are perceived as excessive, particularly when contrasted with non-faith-based ethical funds such as Vanguard ESG U.S. Stock ETF (ESGV).

Key Decisions for Investors

• Investors should critically evaluate GLRY's high 0.80% expense ratio and significant 82% portfolio turnover against its recent six-month outperformance, especially considering its longer-term underperformance and higher risk profile relative to its mid-cap benchmark.
• For those specifically seeking faith-based investment vehicles, a comparative analysis with alternatives like PRAY, which demonstrates a better risk-adjusted return profile (Sharpe ratio) and lower fees, is warranted, alongside consideration of broader, potentially more cost-effective ESG funds such as ESGV.
• The sustainability of GLRY's recent momentum-driven gains should be closely monitored, particularly given its concentrated portfolio structure, high turnover, and the noted higher volatility compared to some peers.