Sanlam Private Investments launches bespoke Shariah-compliant equity offering

The options available for Muslim investors expanded this week with the launch today by Sanlam Private Investments (SPI) of a bespoke Shariah-compliant equity portfolio for private investors. The offering is a departure from the ‘one-size-fits all’ Shariah options currently available in South Africa because it gives Muslim investors access to investment portfolios which are tailored to their individual investment needs and designed to deliver strong performance.

According to Daniël Kriel, chief executive of SPI, one of South Africa’s fastest growing private client businesses, the new direct equity portfolio means that one Shariah investor’s portfolio need not look the same as the next investor’s. “There are currently five Shariah compliant unit trusts in the country but none of these allow for tailor-made investment choices. This market has been neglected to date and many Muslim investors have not had the opportunity to ensure their investments adhere to The Shariah.”

He said investing in Shariah compliant products has become increasingly popular, particularly after the credit crunch that crippled those banks and companies that dabbled in debt.

The SPI portfolio will be managed by Yusuf Moola – a professional with more than 16 years’ stockbroking experience. Moola says, “We will always look at quality stocks and we prefer well-known companies with sound management principles, high dividend yields and a positive cash position. Companies must also show strong fundamentals.”

He said the portfolio is focused on quality heavyweight blue chip stocks. “We favour stocks such as Anglo American, BHP Billiton and Sasol. The portfolio is 13 percent invested in Billiton, 12 percent in Anglo and 10 percent in luxury goods group Richemont.” However, Moola still has 17 percent of the portfolio currently invested in cash, and invests in Shariah compliant bonds for those more risk-averse investors.

SPI will determine the risk profile of each individual investor and invest in the appropriate Shariah compliant stocks accordingly. “Our minimum investment is R1-million and this new portfolio accommodates both investment of long-term discretionary and non-discretionary funds, including retirement funds.

If an investor wants to take advantage of a specific investment opportunity, Sanlam Private Investments can facilitate this through a stockbroking service. The portfolio charges no upfront or exit fees, and there is no difference between buy and sell costs (which is normally the case when investing in unit trusts). Moola says, “As a result, our portfolio is far more cost effective than any unit trust offering would be.”

The JSE Shariah All Share Index advanced more than 10 percent for the year to 12 October. Although that is less than the All Share Index’s 16 percent gain over the same period, Moola says Shariah investing is in general more conservative. “Shariah compliant investing does not allow investment in the financial sector (because of the interest financial firms pay), as well as in companies that operate in sectors such as gaming and casinos, tobacco and alcohol, arms and weaponry, and amusement and recreation, among others. It also avoids companies such as Tiger Brands, because of its pork operations.”

Sanlam Private Investments will consider launching more Shariah compliant products for Muslim investors in the future. The company is currently investigating a Shariah compliant property portfolio, which would look to invest in property unit trusts listed on the JSE.