FaithInvest's new Executive Chair Dave Zellner, who recently retired after 27 years as Chief Investment Officer at Wespath Benefits and Investments, reflects on how his personal faith journey has shaped his approach to investing
I was raised in a devout Roman Catholic household, where faith played a central role in shaping my values and worldview. From a young age, I attended Catholic grammar school, rarely missed a service, and even made it a point to attend Holy Day of Obligation masses, regardless of where I was, even when traveling for business. My dedication led me to become an altar boy during grade school.
I often reflect on how I memorised the Latin responses only to find out when I applied to become an altar boy that the Church was about to transition to English response! When I entered high school, I continued to serve the church in a different capacity, taking on the role of a scripture reader.
Though my faith has evolved over time, my deep respect for those who dedicate their lives to serving God and making the world a better place remains steadfast. This respect has profoundly influenced my personal and professional journey, particularly in how I view the intersection of faith and finance.
In an industry where the primary objective for many is to maximise their financial compensation, I have always placed immense value on the "psychic" compensation that comes from serving others.
I spent the first 17 years working in various positions for a multinational oil company and nearly three years in asset management. When I began working for a faith-based institution, I often joked that I joined to atone for my past sins in the corporate world. However, the truth is that this transition allowed me to align my professional work with my personal values.
As a prudent investor, I have always been committed to adhering to sound fiduciary practices to achieve the best possible investment outcomes. Serendipitously, the principles of serving others and the faithful stewardship of assets align well with the goals of faith-based investors.
Two core beliefs have driven my investment philosophy, which I believe are particularly relevant to faith-aligned investing.
The first is the importance of focusing on long-term success. Nearly all faiths and faith-based organisations aspire for their missions to endure in perpetuity. Similarly, successful investing requires a long-term perspective, yet the investment industry often fixates on short-term results. This myopic focus can lead to irrational and suboptimal decisions that jeopardise the long-term sustainability of organisations.
Companies that wish to endure must prioritise understanding and mitigating risks that threaten their long-term viability. Mitigating many of these risks aligns with the values outlined in the United Nations Sustainable Development Goals. Addressing them not only ensures the long-term sustainability of a company but also positively influences future profitability and returns for investors.
The second belief that resonates with faith-based investors is the power of investing for positive impact. Throughout my career, I often pursued contrarian investment strategies, focusing on markets that are overlooked, under-researched, or perceived as risky. I fully embrace Warren Buffet's saying: 'Be fearful when others are greedy and greedy when others are fearful'. This contrarian nature has led me to focus on what are known as "inefficient markets"—those that are new, untested, or ignored due to perceived biases.
One striking example of this is the Low-Income Housing Tax Credit (LIHTC) program, which I encountered early in my work with Wespath. This program, launched by the U.S. government in the 1980s, incentivised the private sector to build and maintain housing for low and moderate-income families. It was new, under-researched, and overlooked by traditional lenders due to bias. Many investors initially dismissed it, assuming that loans with a positive social element must provide less than market-rate returns.
However, the US federal government had put in place robust risk mitigation measures combined with "credit enhancements" from government agencies and nonprofits. These protections made LIHTC a highly successful program that now attracts significant market-rate capital from major banks and investors.
The lessons from LIHTC apply to other faith-aligned investments. Governments and nonprofits often offer significant risk mitigation to ensure the success of socially beneficial projects. Those who dismiss such investments as inherently suboptimal are missing out on opportunities for excellent financial returns.
Of course, rigorous due diligence is necessary to ensure that investments expected to have a positive impact are truly viable. However, the market remains "inefficient" because many investors harbor biases against investments with social or environmental impact, refusing to consider them. This creates opportunities for those willing to look beyond the surface.
Finally, I must address the topic of ethical exclusions and divestment. As I mentioned earlier, inefficient markets create opportunities. Excluding entire sectors or divesting from specific industries creates inefficiencies, creating opportunities for others. While I understand the desire to avoid investing in companies that conflict with one’s beliefs, I believe that true faith-driven transformation requires more than just avoiding certain investments.
Faiths aspire to be transformative, to model behavior that fosters social cohesion, prosperity for all, and environmental stewardship. Therefore, while exclusions may align with a faith’s values, they are not transformative. I strongly believe that the bulk of faith-consistent investment efforts should focus on engaging for change and investing for impact.
At FaithInvest, we are committed to guiding faith-based asset owners in contributing to this transformative vision—one that ultimately benefits both people and the planet.