Wednesday, December 30, 2015

Although prayer has been an important part of my life for the past 40-plus years of my career in the world of investments, it wasn’t until the Lord prompted me to launch a biblically responsible mutual fund dedicated to His principles (i.e. avoid investing in companies that are pursuing an unholy agenda through their involvement and support of things like abortion, pornography, active promotion of non-traditional married lifestyles, etc.) that my prayer life became intense.

I projected that I needed to raise $1 million in capital to fund this project so I made a list of 50 Christian investor friends that could have easily invested $50,000 each but, to my surprise, only three of them chose to invest. Bottom line: the Lord knew who He wanted to invest I only thought I knew so He led me to the remaining investors, most of whom I didn’t know.

We had a verbal agreement with our initial money management firm that they would manage our initial fund, so I had their name imbedded in our Offering Memorandum. They called me the week before I began raising the capital to inform me that their board had met and decided they could not manage our fund as it might offend some of their other clients. Just fifteen minutes after receiving that call a friend, out of the clear blue, who had just joined another money management firm stopped in my office to introduce me to his new firm. After some fast due diligence, they became our initial money manager.

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Next, even though my pro-forma projections were fairly accurate, our fund did not grow as I had projected so we ran out of capital in 18 months which resulted in the lowest point of my life. Those investor partners trusted me with $1 million and it was gone! Well, I went back to them and they agreed to invest an additional $500,000. Trouble was, we still didn’t grow fast enough for the revenue to cover expenses so we ran out of money again in fact, we ran out of money three more times. Each time at the eleventh hour, the Lord brought someone across my path someone I had no way of knowing who asked if they could invest in our partnership.

During this time, the Securities and Exchange Commission chose to audit us three times during our first two years something unheard of in our industry. The first two times the auditors really did not like our mission and principles (to say the least) and would have loved to shut us down. Although we diligently followed their rules and regulations, you have to maintain adequate net capital to stay in business. Actually, they probably could have shut us down but the Lord wouldn’t let them.

After running out of capital the fourth time, I guess the Lord finally decided He could trust us so our shareholder assets began to grow to the point that we became profitable.

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I could go on and on about the number of times our Chairman (Jesus Christ) intervened on our behalf, but I will share just one more. As we grew, it became clear that we needed to add additional funds for investors to achieve adequate asset diversification so we engaged a team of institutional consultants to help us locate top-tier money managers for our new funds.

Although these consultants were believers, they didn’t think it possible for any top-tier money management firm to agree to manage a fund for us. After all, we started each new fund with zero assets (most managers had high initial minimums), we restricted the companies in which they could invest due to our moral screening research, and we had a fee schedule well below their absolute minimums for their largest clients. Well, I asked them to humor me and conduct the search anyway. They agreed and, even though they were believers, it wasn’t until the various managers agreed to our terms that they understood who our real Chairman actually was. As a result, I am pleased to report that all of our funds are managed by firms that are best-of-class in their various asset categories.

Twenty-two years ago, the pundits said this (moral screening of our investments) couldn’t be done and still achieve respectable returns. Well, with almost a billion invested in 13 mutual funds, success speaks for itself. We are still here, and we have only our Chairman to blame! Although He may, and usually does, jam us through keyholes along the way, don’t try to tell me that prayer doesn’t work.

Art Ally is Founder and President of the Timothy Plan Family of Mutual Funds

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