Mutual Funds are
groups of stocks and other investment instruments (Bonds,
Certificate of deposits, ...etc.) managed by a
"professional" and pooling money from thousands of
investors and leveraging the aggregated amount of the pooled
money in buying stocks and bonds.
Any Mutual Fund falls
roughly into one of two categories (as below). Before you
invest in a fund, you have to know which type it is, and
whether that type is suitable for your goals:
- Income Funds
These aim to provide the investor with a regular income
(monthly/quarterly) by investing in securities that
provide income (e.g. dividend paying stocks, ...etc.). The
appreciation of capital is of secondary importance (if at
all).
- Growth Funds
The main aim of this type of fund is to grow the capital
invested by appreciation of the undelying securities, and
not to provide any annual/quartely income.
| Advantages
of Mutual Funds |
The ideas behind Mutual
Funds is very good indeed.
- Spread the risk by
diversifying the portfolio. If one instrument (e.g.
Stocks) or sector (e.g. Transportation) falters, then the
hit to the overall portfolio is minimal.
| Disadvantages
of Mutual Funds |
Despite their perceived
benefits, Mutual Funds have several drawbacks.
- Can incur huge costs
in fees and commissions, unless you are buying a No-Load
Mutual Fund.
- Historically, they
have under performed the stock market. The best strategy
(for a non-Muslim) is to buy an Index Fund (one that
tracks a major market index, such as the Dow Jones
Industrial Average - DJIA or the Standard and Poor
500 -S&P 500.
- You have no say in
where your money is being invested. Some Islamicaly
prohibited investments can be made without your knowledge.
(Banks, Tobacco, ...etc.)
In addition to all the
above, even if a fund starts out with all Islamicaly Correct®
components (very rare), the managers of the fund reserve the
right to (and often do) change the fund components over time,
as a response to market changes.
- Azzad
Funds
The Azzad Family of Halal Funds consists of two mutual
funds and two private investment funds. A professional
team of experienced portfolio managers incorporates
Shari’ah-based criteria as they try to identify
promising securities for the Azzad portfolios. They
include:
·
Azzad/Dow
Jones Ethical Market Fund, an enhanced index fund based on
the extra liquid version (IMXL) of the Dow Jones Islamic
Market Index (DJIMX)
·
Azzad
Income Fund, invests in equity income securities.
·
Azzad’s private investment funds, the Azzad Growth
Funds, are available to accredited investors and invest in
small-cap stocks.
Azzad
offers several retirement savings accounts and college
savings plans. In addition, investors can meet with a
representative to learn how the Azzad Funds can supplement
their investment portfolios by calling 866-862-9923, www.azzadfund.com.
- Amana
Mutual Funds Trust
They offer two Mutual
Funds (Growth and Income) operating according to Islamic
Principles, with an Islamic Advisory Board.
On their web site, you will find:
You can check their
current price and last daily change, with links to further
analysis:
- Amana Income
Fund: AMANX
- Amana Growth
Fund: AMAGX
- Wright
Islamic Equity Investment
Their objective is to "provide competitive Shari'ah
compliant investment returns utilizing a globally
diversified portfolio of high quality equity investments
rigorously screened for Shari'ah compliance. The minimum
account size is 500,000$, so they are geared more towards
institutional investors or Very High Net worth
individuals. They follow the Dow
Jones Islamic Market Index principles and Sharia
rules.
- Halal
Mutual Investment Company
Is a Bermuda company, but based in U.K.
- Miraj
Global Equity Funds
Based in Montreal, Quebec, Canada, with representatives in
Dubai, U.A.E, and Jeddah, Saudi Arabia.
- Failaka
Investments Inc.
Used to operate a Mutual Fund like arrangement, but have
recasted themselves as Islamic Equity Researches.
- Allied
Asset Advisors
Allied Asset Advisors is a subsidiary of the North
American Islamic Trust (NAIT)
| Islamic
Mutual Fund Monitoring |
In the U.S.A, Morning
Star publishes performance data of the various Mutual
Funds that are available for investors in the U.S.A. Their
data is available on most investment sites such as Quicken.
Failaka
is a a Chicago, Illinois, U.S.A. company with an office in
Kuwait. They monitors the performance of many Islamic Mutual
Funds worldwide.
You can check:
Data for 1998 is also
available, so you can check it if you are interested in
comparing year-to-year performance.
| Other
Social / Ethical Funds |
You can also, further
look into the Ethical / Social Funds which often have
very good ethical causes, but most often would invest in
Islamicaly prohibited components.
These include:
Courtesy
of Muslim-Investor
|
