What is the IBD ETF?
Investing is a complex journey with numerous options, each designed to cater to various investor preferences and goals. One such avenue that has gained considerable attention in recent years is the Inspire Impact Score®-driven exchange-traded fund (ETF), which aligns investments with values while seeking financial growth. In this article, we will delve into the specifics of the IBD ETF, shedding light on its components, selection methodology, and overall strategy.
IBD ETF: Overview
The IBD ETF, short for Inspire Impact Score®-Based ETF, is a financial instrument designed to provide investors with an opportunity to invest in domestic corporate bonds issued by companies that align with their ethical and moral values. This approach stands in contrast to traditional investment strategies that solely focus on financial returns, aiming to strike a balance between financial growth and values-driven decisions.
At the heart of the IBD ETF lies the Inspire Impact Score®, a proprietary selection methodology developed by Inspire Investing, LLC. This scoring system evaluates companies based on their alignment with biblical values and their positive impact on customers, communities, workplaces, and the world. Companies with market capitalizations of $5 billion or more and credit ratings of BBB- or higher from Standard and Poor's or Baa3 or higher from Moody's are considered for inclusion.
The IBD ETF strives to exclude companies engaged in activities that do not align with biblical values, such as abortion, alcohol production, cannabis cultivation, gambling, and other practices deemed incongruent. The methodology also assesses companies' actions in categories such as human rights, environmental responsibility, employee engagement, and more.
IBD overlap What is the IBD ETF?
IBD ETF: Ethical Screening Process
The Inspire Impact Score® methodology employs a rigorous screening process to evaluate companies for inclusion in the IBD ETF. The methodology begins by removing companies involved in activities contrary to biblical values from the investment universe. This involves screening out companies involved in abortion, alcohol production, gambling, and other practices that conflict with the stated values.
On the flip side, companies are assigned a positive score based on their track record of adhering to biblical values across various categories. These categories include access and affordability, air quality, business ethics, employee engagement, competitive behavior, and more. This holistic evaluation ensures that companies contribute positively to societal well-being and operate in accordance with the investors' values.
IBD ETF: Investment Strategy and Portfolio
The IBD ETF primarily invests at least 80% of its assets in domestic corporate bonds that meet the criteria set by the Inspire Impact Score® methodology. The portfolio includes approximately 250 bonds from the top 200 issuers with the highest impact scores. These bonds are equally weighted across four maturity tranches to achieve an average maturity of around 5 years.
The portfolio's composition is subject to periodic review, with Inspire Investing conducting an annual assessment of the Inspire Impact Scores® of the securities. If a security's impact score falls below an acceptable level, it is replaced with a higher-scoring security, ensuring that the portfolio remains aligned with investors' values and evolving societal standards.
Conclusion
In the realm of financial instruments, the IBD ETF emerges as a bridge between investors' financial goals and their moral compass. By utilizing the Inspire Impact Score® methodology, this ETF offers investors an avenue to invest in corporate bonds issued by companies that uphold biblical values and contribute positively to society. This unique approach provides investors with a way to grow their wealth while supporting companies that align with their ethical principles.
Disclaimer: This article is for informational purposes only and does not provide investment advice. It does not constitute an offer or solicitation of any kind. The author and publisher are not providing any investment advisory services.
Alternative Sources for IBD ETF Understanding
For those seeking a deeper understanding of the IBD ETF, it is essential to explore alternative sources beyond this article. Conducting thorough research, consulting financial experts, and reviewing official documentation from the ETF provider can provide a comprehensive view of the investment product. As with any financial decision, due diligence is key to making informed choices that align with both financial goals and personal values.
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FAQ
What is the IBD ETF?
IBD ETF, is an exchange-traded fund that provides investors with exposure to companies operating in the relevant sector.
What is the underlying index that the IBD ETF aims to track?
IBD ETF aims to track the performance of a specific index, which includes companies involved in various aspects of the relevant industry.
What types of companies are included in the IBD ETF?
IBD ETF includes companies from the relevant industry, which may consist of specialized firms, equipment manufacturers, and other related entities.
How does the IBD ETF work?
IBD ETF functions by pooling investors' capital to purchase a diversified portfolio of related stocks, aiming to replicate the performance of the underlying index.
What are the advantages of investing in the IBD ETF?
Investing in the IBD ETF offers exposure to a specialized sector with potential for growth and innovation. It allows investors to diversify within the industry, which could experience significant advancements and expansion in the future.