Vatican Bank Launches Catholic-Principles Equity Indexes, Eyes ETFs

Summary

The Vatican Bank (IOR) has launched two equity indexes designed to track medium- and large-cap companies that meet Catholic ethical criteria: the Morningstar IOR Eurozone Catholic Principles Index and the Morningstar IOR U.S. Catholic Principles Index. Each index contains 50 stocks selected for alignment with Catholic values, establishing tradable benchmarks that can support future financial products, including exchange-traded funds (ETFs).

What was launched

• Two benchmarks: Morningstar IOR Eurozone Catholic Principles Index and Morningstar IOR U.S. Catholic Principles Index.
• Constituents: 50 medium and large-cap companies in each index, selected for consistency with Catholic ethical criteria (emphasis on human dignity, social justice and related principles).
• Reporting and governance: The Vatican Bank reports to the Committee of Cardinals and the Pope; the new benchmarks are intended to strengthen internal performance assessment and external transparency.

"Having benchmarks built in accordance with recognized Catholic ethical criteria allows us to make our performance assessment and reporting processes even more rigorous and transparent," said Giovanni Boscia, Vatican Bank deputy director general and CFO. "This initiative reaffirms our commitment as a financial institution serving the Church, further strengthening the role of the [Vatican Bank] as a reference point for the Catholic world."

Index composition and notable holdings

• The Eurozone index includes semiconductor equipment supplier ASML (ASML) and telecommunications firm Deutsche Telekom (DTE.DE) among its largest holdings.
• The U.S. index lists large-cap technology names including Meta Platforms (META) and Amazon (AMZN) as top positions.
• Each index focuses on companies that meet ethical screens consistent with Catholic principles rather than sector exclusion only; selection emphasizes operational alignment with social and human-centered criteria.

Market context and demand drivers

• The global ETF market has expanded rapidly, increasing nearly 30% to exceed $14 trillion in 2024. Forecasts project continued growth in passive and thematic products into the decade.
• The thematic and values-based investing segment (including religiously aligned funds) is a niche but growing portion of the broader passive-investment ecosystem. For example, a Catholic-focused mutual fund family reported $3.8 billion in assets under management last year, illustrating persistent investor appetite for faith-aligned products.
• The launch of rules-based benchmarks is a common step before licensing an index for use in ETFs. Creating a clearly defined, audited benchmark makes it operationally feasible for asset managers to develop index-tracking ETFs or other passive vehicles.

Why benchmarks matter for productization

• Benchmark clarity: A transparent, rules-based index enables performance attribution, regulatory reporting, and clear communication to investors.
• Licensing pathway: Index publishers often license benchmarks to ETF issuers. With two established indexes covering Eurozone and U.S. universes, the Vatican Bank creates a licensing opportunity for ETF sponsors that target values-driven investors.
• Institutional credibility: Anchoring a product to a recognized benchmark improves due diligence processes for institutional and wealth-management clients seeking faith-consistent allocations.

Regulatory and reputational considerations

• The Vatican Bank has pursued institutional reforms in recent years. The new indexes are framed as part of broader commitments to transparency and governance.
• The institution has a history of scrutiny and legal issues stretching back decades; the launch of formal benchmarks and potential financial products will increase public and regulatory attention.

Investment implications for traders and allocators

• Product development timeline: Index launches do not guarantee ETF creation, but they shorten the timeline for issuers that want to offer Catholic-principles ETFs by providing a ready-made benchmark.
• Portfolio fit: Institutional investors and family offices seeking values-aligned allocations can use the indexes as a screening and benchmarking tool prior to product availability.
• Sector exposure: Because the indexes include large-cap technology and industrial names, investors should expect sector concentrations similar to broad market indexes, adjusted for ethical screens.

Key takeaways

• The Vatican Bank launched two 50-stock equity indexes tied to Catholic ethical criteria, covering Eurozone and U.S. universes.
• The indexes include major listed companies such as ASML (ASML), Deutsche Telekom (DTE.DE), Meta Platforms (META) and Amazon (AMZN).
• Establishing these benchmarks increases the likelihood that ETFs or other passive products will be developed and licensed to track the indexes.
• Rapid ETF market growth and persistent demand for values-based investment products create a viable commercial context for potential ETF launches.

Next steps for market participants

• ETF sponsors: Review index methodology and licensing terms to assess feasibility of launching ETFs that track these benchmarks.
• Institutional investors: Evaluate index construction for alignment with fiduciary and ESG mandates; perform sector and factor analysis before allocation.
• Risk managers: Consider reputational and regulatory impacts of investing in products tied to an institution with a complex compliance history.

The Vatican Bank's indexes represent a notable intersection of religious principles and market infrastructure: clear benchmarks that can be directly used for product development, reporting and institutional allocation strategies.