Continuing our series of analyzing different funds that cater to Muslim investors, in this article we’re going to analyze The Amana Trust Growth fund, ticker symbol AMAGX.
Amana is one of the O.G. funds in the halal investing space with an inception date back in 1994 and over $2 Billion in assets under management.
Unlike the Sharia portfolio and Wahed Invest ETFs previously reviewed, Amana is an actively managed fund. This means it doesn’t just try to mirror the performance of an index. Rather, Amana fund managers are, at least in theory, actively making investment decisions.
Actively managed funds will typically have higher expense ratios and indeed Amana has 1.03% annual total expense ratio compared with 0.5% and 0.49% for the passively managed ETFs of Wahed (HLAL) and Sharia Portfolio (SPUS) respectively.
As for Amana’s investment style, they describe it on their site as:
targeted to investors seeking long-term capital growthSaturna.com
They describe the companies they invest in as:
Generally large-cap, but can invest in any capitalization of domestic and foreign stocks.Saturna.com
Whereas Wahed and Sharia portfolio had 220 and 181 holdings in their Exchange Traded Funds respectively, Amana has around 30.
They have a very reasonable amount of diversification in various sectors and are most heavily weighted in technology stocks.
I reviewed their portfolio of 33 companies and none of them stood out to me as being particularly objectionable from a halalness standpoint.
There is one particular stock that I wouldn’t invest in as a Muslim and that stock is Lowe’s.
Lowe’s is a retail company specializing in home improvement equipment. It is the second largest hardware chain in the United States after Home Depot.
The reason why I would personally not invest in Lowe’s is because in 2011 Lowe’s withdrew its advertising from a show that attempted to portray Muslims in a positive light.
To be honest, the show itself was a cringfest with zero entertainment value but that’s not the point. The point is that this show attempted to portray Muslims as normal people and this upset people who hate Muslims.
These haters then lobbied advertisers to pull their ads from the show and Lowe’s gave in and pulled their advertisements.
While it is perfectly within Lowe’s right to advertise wherever it wants, it is equally within the right of the Muslim community to not forget Lowe’s decision and to express their disapproval with this decision with their spending and investment dollars.
Now some may say it’s been 10 years since this happened and I should probably let it go. However, I think if Muslims want to be respected and accounted for they should not have such short memories.
What Lowe’s did was really bad. They gave in to pure bigotry and this should not just be swept under the rug before it is addressed properly.
Lowe’s should issue a very clear apology for giving in to pure bigotry against Muslims before Muslims start reengaging with this company.
This is my personal opinion on the matter, you’re welcome to make your own judgements and invest accordingly.
Besides, Lowe’s isn’t even that great a company. I personally prefer Home Depot.
If you’re Amana and you’re watching this, I would dump the $54 million in Lowe’s shares that you are holding on to and pick up Home Depot instead. Better yet, pick up some Tesla shares since you don’t already have it in your portfolio.
This way you improve your returns, save the planet and stand up to bigotry all in one fell swoop.
In the chart below you can see the performances of Amana in Red, Sharia Portfolio’s SPUS in green and Wahed’s HLAL in Purple.
Wahed’s HLAL has lagged the other two funds since the start of the year. I think this will continue for some time as HLAL contains small, medium and large cap stocks and I expect large cap stocks to generally outperform given the economic uncertainty we are facing.
Sharia Portfolio’s SPUS and Amana both focus on large cap stocks and you can see their performances really start to separate from HLAL since the March lows in the market.
Currently Amana has SPUS beat by around 2 percentage points after fees but it really depends on when you decide to make your comparison. SPUS had Amana beat in the beginning of the year and at some points in May and June.
Moving forward, It’s hard to predict who will outperform, Amana or SPUS, given that Amana is an actively managed fund and their performance will depend on the investment decisions they make.
If you’re not a fan of active investing and think the indexes will tend to outperform over the long run then you’ll probably be attracted to Sharia portfolio’s SPUS to avoid Amana’s management fee. On the other hand, if you think active investing is the way to go especially in times of crisis, then you’ll probably gravitate towards Amana.
Finally, if you earn more than 200K annually and you’d like to invest some money with yours truly in a unique asset class that has had risk-adjusted returns superior to all the major asset classes since our inception in 2017 go to fundmebff.com and apply to become an investor.
Disclaimer: This article is not to be considered financial or investment advice. Don’t invest any money you can’t afford to lose. Make sure you do your own due diligence before making any investment decisions.