“Should we invest in gun companies? Should we invest in the military? Defense contractors? Do we invest in things like marijuana? … The whole idea is socially responsible investing,” said senior Karl Wenzel, president of Wheaton’s Student Managed Investment Fund (SMIF). “It gets very difficult when you’re trying to compare the magnitude of sins and what sin is worse than others. What is okay? What are we going to look past?”
The Student Managed Investment Fund is a group of 57 student analysts who meet weekly to both discuss and participate in the stock market. The Fund manages the investment of a portion of Wheaton’s over $450 million endowment; starting with $70,000, the Fund has grown their capital by nearly $10,000 over the past two years through investing in industries across all eleven sectors of the S&P 500, an index of the 500 largest companies in the U.S. stock market. These questions of “socially responsible investing” were recently raised for the club in regards to its investment in Pfizer, a major pharmaceutical company which, in addition to hundreds of other medications, provides abortifacient pills.
At the group’s Oct. 12 meeting, junior Josh Clark made a presentation on ethical investing. The Fund has been invested in Pfizer since April 2016, and the ethicality of this investment was brought up during the presentation. Following discussion, analysts voted unanimously to keep the stock in Pfizer.
Prostin E2 was the primary drug in question. One of more than 360 drugs distributed by Pfizer in the U.S., Prostin E2 is intended “for the termination of pregnancy from the 12th through the 20th gestational week,” according to its physician prescribing information. In 2012, Wheaton joined a lawsuit against the Obamacare mandate on employee healthcare plans on the grounds of the college’s moral objections to “abortion-inducing drugs.” At the time, President Philip Ryken emphasized Wheaton’s stance on the “sanctity of life” and stated that the mandate to provide such medications “goes against our conscience.”
This conflict in morals links directly to the investment world.
“The investment brings up an interesting issue,” said Clark, who serves as the head of the Fund’s healthcare sector. “The investment is profitable and makes the vast majority of its profits from life-saving drugs. … , I could have similarly advocated for selling the stock due to concerns about Prostin E2. … Ultimately, the decision to ‘hold’ or ‘sell’ was left to the Fund as a whole, having been informed on the stock from both points.”
Other “questionable” stocks held by SMIF include Duke Energy, which pleaded guilty in 2015 for polluting four major rivers, Valero Energy, which emitted the carcinogen benzene during Hurricane Harvey, and Boeing, which was deemed questionable due to its involvement with war and defense technology.
“The idea of ethical investing is this dilemma of should invest in products that we don’t always agree with or we wouldn’t buy ourselves,” Wenzel said. “There’s this idea that you should invest in companies that are promoting good practices.”
Wenzel views the analysts as “stewards of money” and argues that ethical considerations are arguably more important for Wheaton’s Fund than they are for similar funds “at a secular school or a big public university.” What qualifies as “good practice,” however, is not clear-cut.
“There is sin everywhere, in every company,” Wenzel said, adding that many Christians still patronize grocery stores, even though they may not support every item – cigarettes, tobacco, and alcohol – sold there.
SMIF weighs similar options as they choose which companies to support with their investments. When SMIF originally invested in Pfizer, it was looking at the potential good that some of Pfizer’s research and upcoming products could create. The morality of the company’s more questionable drugs seemed like a small matter in comparison.
“I think the reason why we invested in Pfizer initially was some of their pipeline drugs that they have coming up, which are mostly cancer research and autoimmune disorder pills and different things like that,” said Adam Eaton, another senior member of SMIF who serves on the Investment Thesis Committee. “That was more what we were thinking of.”
Since SMIF purchased it in April 2016, Pfizer’s stock has increased nearly 8 percent. Pfizer makes up 4.31 percent of the fund’s portfolio, which is currently worth more than $79,000. Wenzel made a further monetary justification for the stock based on Prostin E2’s role in Pfizer’s profits overall.
“The question that comes up, first of all, is how much of the company’s revenue … comes from some of those ethically questionable products. Is it the main revenue stream, or is that something that’s very minor?” Wenzel said. “For Pfizer, this is something that is two out of over 360 drugs, so from that point of view we say this isn’t their main focus. They’re providing medication for a number of different health problems, saving lives through a number of medications, doing things that are really helping the world and helping people live better lives.”
SMIF makes pitches to buy, hold, or sell stock on a biweekly basis, at the first and third meeting of each month. The fund is overseen by the Wheaton Trust Company and follows a democratic voting procedure among members to approve decisions on stocks. Each analyst has a vote, and an 80 percent majority is required to approve any buy, sell, or hold pitch.
Eaton sees the mere existence of the Pfizer debate as one example of the club’s success.
“The fund is really tackling complex issues like we haven’t in the past,” Eaton said. “Being able to discuss these , … as they go on in the future and invest, now have some sort of a framework for ‘Hey, maybe I shouldn’t just invest in whatever; I should actually think about it and understand exactly what I’m supporting.’ I know that’s one thing that we’re really happy about.”
Wenzel also believes that putting students in roles of investors is of great value — not only for the students themselves, but also for the endowment and for Wheaton as a whole.
“It can be a beautiful picture — we multiply our money, we grow that money, we protect that money … and are able to fund a lot of great activities out there,” Wenzel said. “We’re really focusing on making sure that students are thinking about how they can serve others, and I think the investment fund is a really great way to be thinking about those questions of ethical dilemmas through a Christian perspective.”