Shariah-compliant KiwiSaver scheme makes good returns for ethical investors

The fledgling Amanah KiwiSaver which is based on Islamic Shari'ah investment principles has made a 13.3 percent return for the three months ending Sept. 30.

The Auckland-based scheme, set up as the only one of its type in March, aims to make at least a benchmark return of 8 percent per annum through one underlying fund - the Amanah Growth Fund - which invests only in US-listed stocks. Amanah's result compares to an average 10.3 percent five-year return for growth funds in the latest Morningstar Research KiwiSaver quarterly survey.

Launching a Shari'ah compliant fund was the brainchild of Brian Henry and Alan Goodman, the principals of boutique Auckland fund manager Goldman Henry. They wanted to capture the burgeoning Muslim community in New Zealand with the latest Census figures showing Islam is one of the fastest-growing religions here with 42,000 followers.

"We got a bit of a currency hit with the first quarter and a currency boost in the second. It's not a bad result but we've got a long way to go," said Henry.

So far it has attracted only $1 million in funds under management, making it one of the smallest schemes available. Henry said more of the investment had come from those investing for ethical reasons rather than Muslims doing so for religious ones.

The latter is where the fund is "starting to get momentum", Henry said, and he anticipates they will eventually gain 20,000 Muslim investors over time, particularly if a new distribution deal currently under negotiation pans out.

The fund's fees include a performance fee payable each March of 15 percent of the funds under management for returns above the benchmark.

Henry said he was still cautious about where the markets were going over the next few years and the next 12 months in particular, but he expected strong growth in the US and US currency. The fund is currently invested in US stocks and 8 percent of funds held in cash but if it grows substantially Henry said the plan was to also invest in debt-free property, primarily farming-type ventures.

(BusinessDesk)