Today we're going to be discussing the topic of physically responsible investing. And we're joined by Robin John, co-founder and CEO of Eventide Asset Management, the advisor to Eventide Mutual Funds, a family of mutual funds with approximately $2 billion in assets under management. And Eventide seeks to invest in companies that are creating and not extracting value for all stakeholders, including customers, employees, and society. And prior to joining Eventide, Robin held leadership positions at BNY Mellon and Grant Thornton and has a degree in economics from Tufts University. Welcome to the Christianity and Business Podcast, Robin. Thank you so much, Darren. Well, it's an honor to have you. Really looking forward to jumping into this topic of biblically responsible investing. Starting out, why don't you just share a little bit about your personal background and what led you to start Even Tide Funds?
SPEAKER_02Yeah, so my background is uh I have an economics degree from South University in Boston. And uh I went on to work at Bank of New York, Mellon. Uh then I worked in public accounting for a while, but ultimately I didn't see an alignment between my life, my work, my faith. And uh that really caused me to uh to wonder whether I should go into ministry, go into nonprofit work. I took some classes at uh the Gordon Commonwealth, I think maybe I should try uh going to ministry, and I prayed about it, and I wasn't feeling as though I was being led into full-time ministry work. So what I did is I quit, uh quit my job at the time, and I just decided to pray about it. I just thought God, God, whatever you need me to do, you know, make it clear to me. And um, uh ultimately I wanted to be a good steward and impact God's kingdom, but I also wanted to use the gifts and talents that God had given me. And um, so through that prayer, uh I was praying with um, my colleague, who I started Eventide with, and uh that's really how Eventide came about, is we wanted to use our backgrounds, our giftings, our education to honor God.
SPEAKER_01Well, you know, the idea of integrating the Christian faith with business in such an explicit, overt way uh w doesn't come very naturally for most Christians. So what would you say would be, I mean, obviously you prayed and God responded, but was it were you sitting under teaching by a particular person that really kind of had this framework? Was it I know Gordon Conwell has some programs around faith and work, which a lot of seminaries and um uh you know Christian universities uh don't quite have yet. I think we're moving in that direction, but where did that that uh that framework kind of get instilled into you to understand that God doesn't got that God actually wants to be involved with business?
SPEAKER_02Yeah, so it's been a journey, and I would say that it's still a journey. We're still learning, we're still drawing. Um it's not it's not like a light bulb just came on one day and said, Oh, I'm I'm doing I'm I'm investing in a way that is displeasing to God. I think it's been a process. Uh, but I would say that for me, very early on, a book by Randy Alcorn named uh Money Possessions in Eternity, uh there's a chapter in that book on investing. That book had an impact on me. And then I would say the Proverbs 1 passage, where it talks about ill-gun gain, had an impact on us. Um that passage basically says, tells us not to share a purse with people that plunder and pursue ill-gone gain. And mutual fund is really a purse, right? Many people are, to use the language of the Proverbs, casting lots together and sharing the profit or loss together. So uh so that passage made it pretty clear to us that there is such a thing as ill-done gain and therefore well done gain, and that God is displeased with ill done gain, that God wants us to pursue profit in a way that is pleasing to him, and that even those that are passively sharing in those prophets are also guilty of ill-dongain. So uh that uh passage was very convicting to those of us who started Eventide uh very early on, and so I would say that when we started Eventide, the focus was much more on avoiding the bad. But over time, as we uh continue to learn the Bible, um we've moved, we've we've grown in our in our thinking and our investment philosophy, and um we've understood the Bible not just to be the to avoid the bad, but to embrace the good. So there's a whole process by which we seek out companies that we believe are creating value and blessing and prohibition in the world.
SPEAKER_01Well, let's say that I'm a prospective investor that's maybe considering going with Eventide as my primary asset management company. And what what is sort of the pitch that you would give to that person uh to help them to decide whether EvenTide is the right fit, or maybe they would go with kind of another kind of standard asset management company that may be out there?
SPEAKER_02Yeah, so we always want to be careful not to promote eventights, I guess to sell eventigs to a person as an investment opportunity based only on biblical principles, because we don't want anybody to uh feel guilty or or or or we don't want to use scripture or our faith um to benefit us from a business perspective. Um but uh so for that reason we do spend a lot of time discussing our broader investment philosophy, our products, the markets, why it's a good time to invest in a certain product now versus another product. But having said that, for a person who is considering aligning their faith and their investing, their faith and their profits, uh I would say that from the very beginning, uh in 2008, when we launched Eventide, we had a very unique sense of purpose. And as a result, a unique approach to investing. Uh, we at Eventide are convinced that companies that create value, compelling value for stakeholders make the best investments. And by stakeholders, I would say uh Eventide has specifically six stakeholders that we analyze: three internal, three external, customers, employees, supply chain, communities, environment, society. And uh we believe that that value creation business models over time prosper attractively and sustainably. We also believe that companies that uh have plunder business models, companies that extract value from stakeholders, may prosper for a while in the short term, but we believe that ultimately there is a day of reckoning, and that day is always painful for investors. So, one example of that is the subprime mortgage and mortgage industry and what happened in 2008. Um we at Event do believe that there are business models and business practices that are God placing and others that and God honoring and others that are God displacing.
SPEAKER_01So, what would you say would be maybe an example of of the types of, and by the way, I think it's I think as an investor, I would feel more comfortable knowing that that my asset management company, you know, that that and the one that's putting together the mutual funds for me to invest in has not only looked at okay, here is the track record of how this company's stock has performed over the last couple of decades, but but you're actually looking at the foundations of the company, not just in terms of how well they've done financially, but you're looking into the culture, you're looking into those six different pillars. Is that what I hear you saying?
SPEAKER_02Yes, very much. Yeah, uh most, I would say, financial analysis that is happening at your standard portfolio management firms generally are looking at statements, financial statements, looking, I would say, at the same data sets, right? So if you take nine out of ten portfolio managers, they're generally looking at the same data sets. I think one of the things that makes Ebentide unique is that we are looking at uh data sets that most people are not looking at, and we do believe that there is alpha generated from the data that we look at. So, for example, on the customer side, something we look at is something called the net promoter score. And uh there's a book uh called The Ultimate Question by Fred Reichfeld. He is um uh with uh Bain Consulting, and so that book argues for the fact that the net promoter score is a is a score that uh is a leading indicator to a company's long-term success. Normally, when we look at uh at financial statements, they're backward looking at what a company has already done. Um another uh another example, and by the way, the net promoter score is a score that customers give a company on how likely they are to recommend their friends and family members to the company. Um and that encompasses everything, right? Um if a customer uh is not happy with with any part of their experience in a uh with a company, they probably would not provide a high mental motor score. Uh another example on the employee side is um employee turnover. Um we value that very much uh in our process. Uh we believe that companies that have happy employees, companies that have low turnover, are generally better positioned for the future. Um companies like, to give an example, Walmart pays their employees one-third what a company like a Costco would pay their employees. Um and therefore Walmart is spending more um time and effort and resources in hiring new employees, training employees, while Costco is able to spend more time on their business and they have just more, you know, because they're they they pay their employees better, they have lower turnover, they have more passionate, more productive employees as well. And for store, Costco is much more profitable than Walmart. They're in the same industry. So that's just one example um of how the employee value creation metrics play out in the real real world. Uh we have different um metrics that we look at across the stakeholders.
SPEAKER_01I love that. I mean, and these are the types of metrics that you're not just gonna find on Yahoo Finance. You know, you're gonna have to really do some deep due diligence as you're doing to find out the culture and the way that employees are being treated. I mean, not just looking at the bottom line, but but that that net promoter score and how much are people, how much do they love this company? Yes. And and how much do they want to go and tell other people about the company, and how happy are the employees and all of those kinds of things. So now is there a demand for and we're also talking about the um the biblically based investing, and so there are these are all scriptural principles, right? I mean, that this isn't just I mean, it's kind of a it seems like a no-brainer that a company needs to take care of their employees and they're gonna do better. I mean, what what does the research, what has it shown you of the performance difference between these values-based companies by comparison to those that don't meet all the criteria for what you consider to be a values-based company?
SPEAKER_02Yeah, so by the way, there are various biblical passages that I could talk about later if you, you know, if there's time, um, that speaks about loving employees, that speaks about loving the poor in your community and how a business person should treat their communities. So there are passages that have very much, I would say, um, helped us create the framework by which we think about investing. Uh, I would say that Wall Street generally um focuses on the shareholder. So the mantra is to maximize shareholder value, right? Shareholder value maximization, uh, Milton Friedman. Uh but at Eventide it's it's about stakeholder value creation. And we believe that companies that create value for stakeholders ultimately will outperform um the their benchmarks. And to respond to your question, I would say the most thorough research that's been done on this subject on this topic of performance and values is a 2015 study done by Doshe Asset and Wealth Management along with Hamburg University. They conducted a survey where they looked at 2,000 empirical studies and found a positive correlation between values, incorporate incorporational values, and financial performance. And what we found at Event is that negative screening, when I say negative, I mean exclusionary screening. So when you screen out things like tobacco and pornography and uh and alcohol and um weaponry, environmental irresponsibility, those types of things, when you screen out the negatives, generally there is very little impact on performance. But when you uh when you factor in the possibles, uh so for example, the net promoter score and the employee turnover rates, when you are looking for value creation in a company, in their business practices, um, when you are able to find a culture at a company that is biblically aligned, I would say that there is tremendous alpha and performance that we're able to identify with also the screening.
SPEAKER_01Do you find that these companies that are values-based, biblically based, are doing so uh that that those cultures have been that foundation is there deliberately based on the Bible because of maybe Christian founders or Christian leaders in the company? Or does it often seem to be um sort of a coincidence if they might have uh a Christian at the helm?
SPEAKER_02No, what we found, unfortunately, is that most Christians thinking about business is very much the same as the world's. And uh whether it's investors or business people, what we found is that most people they operate under the framework of maximizing profit by any means. And in some ways, um they you know, there is this understanding that by giving those profits, by being generous with those profits, that it somehow baptizes the ill gone gain, right? So um, so what we found generally is that you're right, um it is there is uh what I would say a deliberate, intentional, top-to-bottom um the management of companies that are looking to create value, but generally it's you know, there isn't a correlation between whether the CEO is a Christian or not a Christian. Um, you know, some companies just do a very good job in loving their neighbors and talking to their customers, loving their employees, um, and others don't. And um uh that's unfortunately um I would say true for both Christian management as well as non-Christian management.
SPEAKER_01Right. And is that sometimes because the the companies that are led by Christians, you know, I'm thinking um, for example, Chick-fil-A, and the way that Truett Cathy made it very clear to his heirs that they were to never take the company public uh because of what the investors may decide to do with the company as far as the philanthropy and the culture and all those kinds of things. Is is there is that because a lot of them are kind of staying private, or what what are you seeing there?
SPEAKER_02Yeah, I would say that's a component of it. And also I would say that when a company does become public, there's more pressure from shareholders to meet uh just short-term results. And oftentimes the long-term results are compromised uh in favor of short-term results. So I would say that's a huge issue with private with public companies, is um you know they'll um take advantage of employees in the short-term, right, uh, in order to maximize the short-term gain. But what happens is the disgruntled employees long-term is going to be less productive in the company. Um you look at uh biblical counsel, you know, there is just so much scripture. And uh also when you study the biblical history, so for example, uh John Wesley, the founder of the Methodist Church, uh, he's sometimes referred to as the father of uh socially responsible investing. John Wesley preached a sermon called The Use of Money. And in that sermon he said, make all you can, should give all you can, but make all you can without hurting yourself or your neighbor in body or in soul. Um today, uh what I experience is that we stop halfway through, right? We'll say, make all you can, give all you can, but how the money is made is often not an emphasis. I don't think that many of our churches or our pastors are equipped when they talk about stewardship. Generally, you know, pastors are talking about giving. Uh, they don't feel equipped to. Talk about uh how we go about thinking about our work and business. So there's a huge, I would say, um, need within the church to bring more education to the Christians about the purpose of their work.
unknownRight.
SPEAKER_02Uh, it's not just to make profit at any at any cost, it's really to be a blessing in the world.
SPEAKER_01Yeah. What would you say are some of the key scriptures that will determine uh whether or not you're gonna bring a certain company's stock into your portfolio of funds or or if you're going to uh support this company and consider them part of your values-based portfolio. I mean, what would be some of those scripture passages?
SPEAKER_02Yes. So there's a lot of scripture that generally provide a guidance, and um it doesn't specifically tell us how to operate on Wall Street, but it gives us general biblical wisdom and guidance. Um we have a process that we call Business 360. Uh, it's a framework that is still being developed into a process, and uh that framework helps us, guides us in thinking about stakeholders and how to love stakeholders, how to create value for stakeholders. So, some of the biblical passages I mentioned earlier, Proverbs 1 talked about Odam Gain. Um, Leviticus 19 talks to business people and it tells you how to treat your neighbors in business. So, for example, the passage tells you how to treat your hired servants, your employees. It tells you how to treat your communities and the poor in the community, and then it goes on to tell the business people, and in that passage, the business people are specifically farmers and vineyard owners. It goes on to tell them how to, it goes on to tell them to love their neighbor as themselves, right? So, and it gives some very specific examples of who their neighbors are. Another example, I would say, is uh the story of um King David when he is uh in um uh the cave of Abulem. Uh later in life, the Bible tells us that uh that you know he is basically hiding from the Philistines, and they have taken what the Bible calls the stronghold. And David is very cursed too, and David says, Oh, I wish I had had water from so and so well in Bethlehem. And the Bible says that his employees, his mighty men, his soldiers, they put their lives at risk to go and fetch water for David, and they bring the water back to David, and the Bible doesn't tell us that anybody got hurt, but David looks at the water, and David says, I cannot drink this water, and the Bible says that David poured the water in front of his men and said, I cannot drink this water because it is a delight, at the risk of my my men's lives, that they got this water for me. So when we look at more, you know, our our investing and the types of companies we invest into, just to give a very similar example to to the situation that David faced last year or the year before, news came out about a company in China called Foxconn. And uh, Foxconn was uh is a company that many American companies outsourced to, and uh and Foxconn um basically was trying to maximize profits, and therefore what they were doing was was making their employees work day and night for days, and their employees were committing suicide so Foxconn had to put nets around their buildings so that they could catch their employees when they jumped off, right? So and publicly traded, large cap American companies that names of companies that you would know were using Foxconn as a uh as a supplier, as a vendor. So, you know, American investors were profiting, right, because of um Foxconn's business practice. We as Christians should not be profiting from people dying in other parts of the world.
SPEAKER_01Wow. I love the example that you that you gave of David and the way that he poured out that water. I mean, I guess typically the way that I've often read that story was was more like how could he destroy the morale of his guys like that and just pour the water out after they risk their lives for it? But I I love the perspective that you're providing and the the example from Foxconn. I mean, that's it's ill-gotten gain. And and there's and and you can't always see that. I mean, it's easy, it's somewhat easy to to screen out the the tobacco companies and the pornography companies, and but to to when you peel back and and look at the heart of a company in the way that you're doing and and the types of things that aren't always gonna show up on a financial statement, I mean that's really the only way you're gonna know. I mean, there's just there's so much there's so much information out there, and I I just thank God for the work that you're doing in order to help to shed some light on uh not not only showing what not to invest in, but to show people what to invest in. You know, the the the really positive examples as we're wrapping it up here, what would be, you would say, a just a great company that people may not know about in the ways that they display these biblically responsible values?
SPEAKER_02Yeah, so if you look at our holdings, our top and holdings, even on our fact sheet, there are just many companies we're just so excited about. I would say, especially in the biotech space, uh uh obviously there are concerns in the biotech space uh when it comes to things like abortion, uh, but this is a space that is just totally innovating, and uh there are just new therapies and um you know solutions that are bringing um being um um uh brought forth into the marketplace. So there's just lots of opportunity there that we're excited about. One of our top holdings uh recently was Tesla, Tesla Motors. And that was our top holding uh two years ago, I believe. Two years ago that was our top holding, who was our best performer as well, two years ago. And um we love the fact that at Tesla their employees love to work there. Some you know um employees tell us that they would work for Tesla if if they didn't get paid. That's how much they love to work for Tesla. And Tesla has a very obviously um uh strong mission of of uh of creating a cleaner environment, and uh they're working hard to create a uh a battery power powered car that could ultimately be in the hands of average people. Right now the cars are still expensive, um, but they're moving in a direction of bringing those costs down. Um so that's an example of a company we like. Um another company we've invested in the past was a company called DOMTAR, which is a clean paper company. Um, you know, they um you know, even though it's in the paper industry, they've received various awards by environmental groups for being a sustainable paper company. So with all of our holdings, we're looking uh especially to see what the issues in the given industry is, and then looking to see what are the greatest value creation uh business models within the industry before we invest in that industry.
SPEAKER_01And I know that your Gilead fund and I'm sure uh other funds that you have have been performing very well. Um what would you tell us about some of the success that you've had in a track record with some of these funds?
SPEAKER_02Yes, so um God's blessed our performance. I do believe it's um due to being able to have a process by which we find companies that are um creating value in the world, companies that are innovating. Um part of it is also part of the performance is also due to the fact that we overrate in biotech. We have a lot of expertise in-house when it comes to biotech. Uh that space tends to be a little bit more volatile, um, but long term we're just very excited about that space. And uh also um we leverage expertise. Uh so at Eventide, we know, we understand that one or two or three or four people cannot have expertise in everything. Uh there's no such thing as expertise when you know um when it comes to large cap or when it comes to international, but we do believe that we could we could identify expertise at the industry level. So what we do at Eventide is for every single industry, we're looking for people, analysts, and portfolio managers within the industry that we find to have proven expertise, and we leverage their research, and so that's really helped our performance as well, is being able to leverage uh expertise that we're able to identify within the within various industries.
SPEAKER_01Well, that's that makes a lot of sense in terms of how do you get all of this information to know the the inner workings and really the heart matters of these industries and the companies within those those industries. Um it's incredible work that you're doing. I wish we had more time because I would love to know more about what the process is like in order to go about getting this information.
SPEAKER_02Yeah, I'll just tell you real quickly that uh the process in some ways is easier for us than if we didn't have a biblical framework. Um, because we have that framework, we start our research from a much smaller universe of companies than another portfolio manager that's trying to devour and you know, just trying to understand the entire investable universe. For us, the universe is smaller just because we want companies that are creating value. So we're able to focus our attention on a smaller universe of companies.
SPEAKER_01Yeah. Well that makes that makes a lot of sense. What would be a parting piece of advice uh you'd like to share with somebody that's maybe considering making this shift to really become more of a deliberate, uh, biblically responsible investor?
SPEAKER_02Yeah, so I would say for both investors and for business people, those that are pursuing work, I would say it's about integrity, it's about aligning your life. Um oftentimes we fall into the trap of uh being what I would say our Sunday Christians, where our worship is limited to things that feel sacred or spiritual, and we don't bring God into the secular parts of our lives. So I would say it's very broadly to business people listening, to investors, to potentially students listening and and um and exploring different uh degrees and thinking about your education and your future. I would say you know, we're able to create value, we're able to build God's kingdom here on the earth through our work, through our investing, partner with good companies, you're if you're an entrepreneur, um build good businesses that are able to create a better world for people to live in.
SPEAKER_01I love it. And I would just add one more thing. I know that uh Robin is is being very humble about the success that the that some of his funds have had because I know that there's knowing a little bit about the industry, you can't say too much in terms of of how things have performed um because of some of the laws that are that are out there. But I know that that the Gilead fund in particular has just uh from from some of the research that I've done has just outperformed so many of the other funds in its and it's classed, and and and it's clearly a tribute to biblically responsible investing. And Robin, just thank you so much for coming on and taking the time to share your wisdom and expertise with us. Um is Gilly, or I'm sorry, is Eventidefunds.com the best place to connect with you?
SPEAKER_02Yes, and uh I also do have a LinkedIn page uh people to connect through the LinkedIn page. Uh, if you send an email to info at Eventidefunds.com, um that the email will be forwarded to me as well.
SPEAKER_01Excellent. Robin, thank you so much. Uh continue going forward and doing great things for God in the marketplace.
SPEAKER_02Thank you so much, Darren.