New Shari’ah-compliant fund offers diversification
In the current market conditions when diversification is more important than ever, Old Mutual Unit Trusts, in partnership with Al Baraka Bank and Channel Islam, has launched a Shari’ah-compliant asset allocation fund that offers investors excellent diversification through access to most local and international asset classes. The Old Mutual Albaraka Balanced Fund of Funds provides investors with an ethical investment that aims to achieve long-term growth and a moderate level of income.
As a product of the long-standing joint venture between Old Mutual Unit Trusts and the well-respected Al Baraka Bank, the launch of the Old Mutual Albaraka Balanced Fund is yet another step toward Old Mutual’s goal of giving investors access to a full range of funds that are managed in line with the ethical and spiritual requirements of Shari’ah law, as overseen by the funds’ Shari’ah Supervisory Board. The joint venture also offers the Old Mutual Albaraka Equity Fund unit trust, which was launched in 1992.
One of the key advantages of the new fund is that, by investing across many asset classes – rather than only local equities - it gives the investor additional security through diversification. Added diversification comes through its ability to invest in other unit trusts.
The fund is managed by the specialist team at Quantitative Investments, a boutique within Old Mutual Investment Group SA (OMIGSA). Saliegh Salaam, who manages this fund as well as the Old Mutual Albaraka Equity Fund, has 15 years of investment experience and is joint head of OMIGSA’s Quantitative Investments boutique.
Salaam says, “The Old Mutual Albaraka Balanced Fund is suited to investors seeking long-term growth and a steady income who want to access opportunities in the local and global markets, but at reduced risk. The fund also offers a moderate level of income through a portfolio that diversifies across asset classes. Investors gain access to both local and international asset classes including equity, liquid assets and permissible non-equity securities.”
“The fund may also invest in the portfolios of other unit trusts, both locally and those registered in countries with acceptable regulatory environments and approved by the Shari’ah Supervisory Board. Currently, international equity is a popular asset class among both local and foreign investors.”
The benchmark against which the performance of the fund is measured is a composite of the Customised SA Shari’ah Index, the Dow Jones Islamic Index, the STeFI Composite -0.5% and three-month US Dollar LIBOR.
Salaam says, “Shari’ah-compliant investing is really about abiding by Islamic principles. These include, for example, avoiding the paying and receiving of interest, and investments into companies involved in alcohol, gambling, non-halaal food products and media.”
Income deemed to be non-permissible is paid to a charitable trust elected by the Shari’ah Supervisory Board. Non-permissible income does not form part of the investor’s income.
The Shari’ah Supervisory Board which oversees the Fund comprises internationally-recognised scholars in line with the standards of the AAOIFI, which reflect global best practice. The Association for Savings and Investment SA (ASISA) and Al Baraka Bank are members of AAOIFI.
This well-respected Board is actively involved in ensuring the purity of the assets selected for inclusion in the fund. The Board evaluates the suitability of any asset proposed for purchase by the fund managers and investment may only take place if the Board approves such an asset.
“Muslim investors across the country can be assured of the rigorous criteria and transparency of the Old Mutual Albaraka Balanced Fund,” adds Salaam.
The fund is also Regulation 28-compliant, making it suitable for retirement fund investors, and is available directly from Old Mutual Unit Trusts or via Old Mutual’s investment platforms Fairbairn Capital and Galaxy.
