Business | Banking
Channel Sponsor
Amana Islamic fund trumps the US competition
In a dire year for mutual funds, the Amana Trust Income Fund, the main Islamic investment fund, has trumped those from all other faiths in the US by losing only 25.8 per cent of its value for the year - half the average 44 per cent loss for US stock funds.
- By Deborah Brewster
- Published: 23:32 December 27, 2008
New York: In a dire year for mutual funds, the Amana Trust Income Fund, the main Islamic investment fund, has trumped those from all other faiths in the US by losing only 25.8 per cent of its value for the year - half the average 44 per cent loss for US stock funds.
The two Amana funds, which invest according to Islamic principles, are seeing such strong inflows that they are having difficulty finding enough stocks to buy.
Nick Kaiser, the manager for the funds, said that Amana took in $40 million last month alone, with more than half of that from non-Muslim investors who are chasing the funds' strong returns.
Amana has benefited from its avoidance of fin-ancial stocks that are forbidden under Sharia religious law - which eschews interest-paying investments. However, the Amana funds also outperformed in 2006 and 2007, before the onset of the financial crisis.
Amana Trust Income just squeaked past the Roman Catholics' Ave Maria Rising Dividend fund, which lost 26.4 per cent of its value during the year.
The Ave Maria funds invest according to Catholic criteria, which include avoiding companies that give employees same-sex partner benefits. Unlike most faith-based funds, Ave Maria does not avoid alcohol stocks.
Amana's other fund, the Trust Growth fund, was third best performer for the year, losing 31 per cent.
The performance data, from Morningstar, the fund tracker, is to December 15 and excludes bond funds and funds smaller than $1 million.
Amana, which manages $1.2 billion, does not buy stocks that make money from alcohol, gambling or speculation, pornography, pork processing or charging interest, ruling out almost all financial stocks, said Kaiser.
Kaiser, an Anglican who is advised by a board of Islamic representatives, said more than half of all stocks were eliminated by using Islamic criteria.
Taking into account his investment criteria, there are about 220 stocks on his recommended list, but he already owns most of them. "With all the inflows, we are all cashed up and there are only about 10 stocks left for us to buy right now," he said.
The largest faith-based fund, the $1.6 billion Thrivent Large Cap stock blend, lost close to 40 per cent for the year. The fund is part of Thrivent Financial for Lutherans, a non-profit group that manages $65 billion in funds.
Faith-based funds have grown in popularity in recent years as investors have sought to place their money in accordance with the principles of religion.
- Financial Times
Share this article
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Journey of UAE's own label owner
Sky is the limit for Rais who has renowned Djs signed to his firm
-
Global Village
Revamped layout featuring four cultures to greet visitors this season
-
UAE's bounced cheque law explained
Senior lawyer Hassan Arab explains court's take on bounced cheques
