Recording a steady performance, Saturna Capital’s Amana Growth Fund recently made it in Eurekahedge’s top 10 monthly returns for all Islamic funds. Speaking to Monem Salam, the president and fund manager at Saturna Capital, NABILAH ANNUAR explores the key factors driving the fund’s performance.
The original Amana fund (Amana Income Fund) was launched in 1986 when the founder and chief investment officer of Saturna Capital, Nicholas Kaiser, was approached by a group of American Muslim businessmen seeking an investment advisor who could run a Shariah compliant equity vehicle for them. The Amana Growth Fund was later launched in 1994 to add a more aggressive yet still Shariah compliant fund for Muslim investors. The fund has thus far recorded a year-to-date return of 10.53%. Its cumulative return since inception is 712.4% while its annualized return since inception is 10.62%.
Domiciled in the US, the fund invests in equities and has the flexibility of investing a portion of its assets in overseas companies. “The fund focuses on companies that have a sustainable competitive advantage in the market place that will allow them to grow sales, cash flow and earnings in excess of the overall economy,” said Monem. Competitive advantage assessed may be in the form of technological superiority, outstanding management quality, superior understanding of market dynamics, and other similar factors. “We also concentrate on companies that manage their finances conservatively by holding little debt. Due to the conservative nature of the investments, the fund tends to outperform during down market period, while still capturing most of the upside in more buoyant market environments.”
Investment risks involved are present at the portfolio level, the factor level and the stock level. As bottom-up stock pickers, Saturna prefers to concentrate its risks at the stock level, although the nature of the Shariah guidelines mean that the factor risk and tracking error will always be a significant relative to common benchmarks such as the S&P500. Monem explained: “We believe that the Shariah guidelines provide solid protection against balance sheet risk and that our focus on good governance and excellent management protects against the risk of malfeasance. We are confident of the outlook for stocks in the US given the strong economic performance of the United States, low levels of corporate debt and continuing opportunities to leverage technology to improve efficiency.”
Top 10 holdings of the Amana Growth Fund are: Adobe Systems (4.1%), Amgen (3.8%), Apple Inc. (3.6%), Intuit (3.4%), Union Pacific (3.0%), Qualcomm (3.0%), Akamai Technologies (3.0%), Johnson & Johnson (2.9%), Church & Dwight (2.8%), PepsiCo (2.8%). Out of its total net assets, in terms of sector allocation, the fund is invested in: technology (29.7%), healthcare (22.8%), industrials (18.3%), consumer discretionary (10.1%), consumer staples (9.8%), communications (5.5%), materials (1.6%), energy (0.1%) and cash and equivalents (2.1%).
Fund Fact Sheet: Amana Growth Fund | |
Issuer | Saturna Capital |
Investment objective | Long-term capital growth |
Trustee | Amana Fund Investment Trust |
Shariah Advisor(s) | Islamic Guidelines approved by Fiqh Council of N. America |
Benchmark (Index) | S&P 500 TR |
Domicile | US |
Inception Date | 2nd March 1994 |
Fund Characteristics |
a) Fund Type: Growth equity
b) Fund Size: US$1.98 billion
c) NAV per share: US$35.37
|
Minimum / Subsequent Investment |
Minimum Initial Investment: US$250
Minimum Additional Investment: US$25
|
Management Fee | 1.10 % expense Ratio (as of August 2014) |
Dividend policy | Pass-Through vehicle |
Fund Portfolio Composition | Long Equity Only |
Performance Summary |
YTD Return: 10.53%
Cumulative return since inception: 712.40%
Annualized return since inception: 10.62%
|