Faith-Based Funds Often Charge Much Higher Fees. What Are You Paying For?

Picture two fund fact sheets side by side on a kitchen table. You circle the expense ratio on each with a pen. One shows 0.27%. The other, a faith-based fund tracking a similar list of companies, shows 0.52%.

"Almost twice the cost," you say to yourself. "For the same market, minus a few companies."

You aren't wrong about the math. The part worth a second look is the goal. That gap between the math and the goal is what faith-based funds are really about, and it's worth slowing down on before you either write the premium off or pay it without a second thought.

A quick note on those two numbers. They are real, not made up for the example. The 0.27% is the expense ratio on Dimensional's U.S. Small Cap ETF (DFAS), and the 0.52% is the expense ratio on the Timothy Plan US Small Cap Core ETF (TPSC). I name them as a real-world comparison, not a recommendation of either one. Sources are listed at the end.

Faith-based funds do charge more, and Morningstar noticed

According to Morningstar's faith-based investing data, the roughly 850 faith-based funds it tracks held about $169 billion as of April 30, 2026. That same data indicates faith-based passive funds charge about twice what comparable non-religious passive funds do. Your two fact sheets are a small version of the same pattern.

Why the gap? Smaller fund size is a likely contributor. TPSC, for example, held roughly $351 million in assets according to ETF Database, and a fund that size can't spread its costs as widely as a fund with hundreds of billions. Other factors, such as the cost of screening and research, may also play a part.

That changes the question you're asking. The premium is not necessarily a markup on your conviction. Some of it may simply be the cost of being small. The better question is whether you can see what the extra cost is buying you.

If you want the returns side of this conversation, I covered it in Does Biblically Responsible Investing Cost You Money?. This post is about the other half: the price of putting your convictions into practice.

Why a fee comparison tells you less than you think

Here is where the side-by-side runs into trouble. Putting two funds next to each other and sorting by expense ratio treats them as two products competing for the same job. They aren't.

A conventional small-cap fund has one goal: capture that part of the market as cheaply as it reasonably can. On that goal, cost is a major factor, and lower-cost funds often do better after fees. Nobody should apologize for caring about that.

A faith-based fund is chasing a different set of outcomes. Total long-term return still matters, and I'd never tell you it doesn't. But it isn't the only return you may be after. The other return is harder to put in a column: owning a slice of the economy you could actually pray over, with a portfolio that isn't funding things you'd refuse to fund with a check.

Think about two coffee orders. Both are coffee. One is the cheapest cup in town. The other comes from a roaster who pays the farmers fairly and tells you where the beans came from. Sorting by price is a fair way to shop, but it answers a question you weren't entirely asking.

Scripture gives a simple frame for this: "For where your treasure is, there your heart will be also" (Matthew 6:21, ESV). Your investments are a form of ownership, and ownership is a form of moral agency. That doesn't mean paying any price for a Christian label. It means your comparison has to include the thing you're trying to do, or you're optimizing the wrong number.

What the extra cost may be buying

When a faith-based fund charges more, a few things may be inside that price. Your job is to check which ones are real.

A screen you can actually read. Take TPSC as an example. Its prospectus says the fund excludes companies involved in areas such as alcohol, tobacco, gambling, abortion, pornography, and what it calls anti-family entertainment, and it reserves the right to exclude others it finds offensive to traditional Judeo-Christian values. Whether that list matches what troubles you is for you to decide, but you can read it, test it, and compare it with your own convictions. A vague phrase like "values-aligned" gives you nothing to test.

An owner's voice. Some managers vote proxies and talk with company leadership in ways that reflect the fund's stated values. Others follow a standard policy. If voting and engagement are part of what you're paying for, ask to see how they've been used.

Honest tracking. Removing companies means a fund will behave differently from the broad market, sometimes better and sometimes worse. That difference is a consequence of the screen, and it can go either direction. What you want is a fund that tells you plainly what it removed.

I wrote more about the practical landscape in Christian ETFs: A Practical Guide, if you want a fuller look at how these funds are built.

"Faith-based" isn't a standard, and that matters

Here is a part that surprises many people. There is no single, universally accepted standard for what a faith-based fund must exclude. One fund may screen out a long list of industries. Another may screen only a few and lean on its name for the rest. Both can use the same phrase on the front of the brochure.

That isn't a scandal. It's the reality of a young and fragmented corner of the market. But it means the label alone can't tell you whether the premium is justified. A fund with a tight, well-documented screen and a real record of voting its shares may be worth more to you than its fee suggests, while a fund with a thin screen may be charging for a name.

So treat the word "Christian" on a fund as the start of your research and not the end of it. The same instinct that makes you read a vendor contract before signing should apply here. You wouldn't skip the terms because the salesman goes to your church.

Three questions to ask before you pay the premium

Proverbs 14:15 (ESV) says, "The simple believes everything, but the prudent gives thought to his steps." A label on a fund is a claim. Here is how to give it some thought.

1. What does it exclude, in plain language? Pull up the fund's own documents and read the exclusion list. Do those exclusions match what actually troubles you? If your biggest concerns aren't on the list, you may be paying for someone else's convictions.

2. What does the premium cost me in dollars? Percentages hide the real number. Using your two fact sheets, the gap between 0.27% and 0.52% is 0.25 percentage points. On a $400,000 balance, that works out to about $1,000 a year. For many households that is worth paying on purpose. For others it isn't. Either way, see it as dollars and not a decimal. (The $400,000 balance is an example, not a figure for any particular household, and fund expenses change over time.)

3. What am I getting that I couldn't get another way? Compare the fund against its alternatives. Some investors look at custom-screened approaches so they can choose their own exclusions, though that route has its own costs, minimums, and complexity. It isn't automatically better, but it's a fair question to ask.

If you want help evaluating tools like these, my post on the Christian investing tool walks through the screening process step by step.

Pay for conviction on purpose

I don't think the answer is to chase the cheapest option, and I don't think it's to buy anything with a cross on the box.

Proverbs 11:1 (ESV) says, "A false balance is an abomination to the LORD, but a just weight is his delight." The principle works both ways. A fund that sells a label it hasn't earned is using a false balance. So is an investor who weighs two funds on one scale and ignores the other thing he cares about.

Stewardship means counting the cost (see Luke 14:28), and counting all of it. The fee is a certain cost. Returns are not guaranteed in either direction, for a screened fund or a plain one. Alignment is something you can examine in a fund's documents, and it's worth checking independently how closely a fund's holdings match its stated screen. It may be what you're really paying for.

So look at those two fact sheets again. The better conversation isn't about which fund is cheaper. It's about what you're trying to own, whether the screen reflects it, and whether the extra $1,000 a year in this example is a price you'd choose with your eyes open. Some people will answer yes. Some will answer no and build a different plan. Both can be faithful. What isn't faithful is paying a premium you never examined.

Your situation, your balances, and your convictions are your own, so none of this is a recommendation for any particular fund or approach.

Sources

• Morningstar, faith-based investing data: roughly 850 funds, about $169 billion in assets as of April 30, 2026, and faith-based passive funds charging about twice comparable non-religious passive funds.
• Dimensional U.S. Small Cap ETF (DFAS) fact sheet: 0.27% gross and net expense ratio as of December 31, 2025. Dimensional's own current fact sheet may show a different figure, so check the latest.
• Timothy Plan prospectus (SEC filing): TPSC total annual operating expenses of 0.52% and the fund's exclusion criteria.
• ETF Database, TPSC: 0.52% expense ratio and about $351 million in assets, as of October 2026.

[FLAG FOR NICK: (1) I could not open the Morningstar page from this session, so the 850 funds, $169B, and "about twice" figures are carried over from your earlier draft and still need a check on the primary page. (2) DFAS shows 0.27% as of 12/31/2025, but Dimensional's own fact sheet as of 6/30/2026 shows 0.26%. I left 0.27% as you asked; the $1,000 example uses 0.27%, and would be about $1,040 at 0.26%. Consider adding "as of" dates. (3) I changed one sentence in your opening: "He isn't wrong about the math. He's missing something about the goal." now reads "You aren't wrong about the math. The part worth a second look is the goal." (4) Naming DFAS and TPSC is a specific-fund comparison. Run it past compliance for Marketing Rule fit, and decide whether question 3 needs a conflict-of-interest sentence if Openhanded Wealth offers custom-screened portfolios.]

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