By: Francois Strydom, Portfolio Manager at Momentum Securities
Momentum Securities has launched a Global Sharia Portfolio providing South African investors access to an international Sharia aligned investment opportunity for a minimal initial investment amount of R5 000.
This portfolio invests in companies contained in the MSCI World Islamic Index (USD), which is also the portfolio’s benchmark.
“Investors can gain access to this portfolio via an exchange traded note (ETN) listed on the Johannesburg Stock Exchange which invests directly in the Global Sharia Portfolio,” says portfolio manager Francois Strydom. “This means that investors gain offshore exposure without having to utilise their offshore allowance.”
Momentum Securities will furthermore ensure that all dividends, interest and management fees are included within this single instrument listed on the JSE.
“At Momentum Securities we select companies and analyse them both in isolation and in context of the macro environment in which they operate, enabling our investment teams to determine what value to place on securities’ growth potential. This investment process assists us in finding stocks that trade below their intrinsic value, generate more reliable cash flows, and ultimately provides us with a competitively performing portfolio,” adds Strydom.
“Our investment management process therefore appropriately gears us towards applying Sharia investment principles to our existing asset management process. This is done on a bespoke basis by excluding securities utilising two types of criteria; business activity and financial ratios,” Strydom continues.
Strydom explains that excluding companies based on business activity, this portfolio refrains from investing in companies that are directly active in or derive more than 5 % revenue from the following activities: Alcohol; Tobacco; Pork related products; Financial services not regarded as Islamic Financial Institutions; Defense/Weapons; Gambling/Casinos; Adult Entertainment; Music; Hotels and Cinema.
No shares outside of the MSCI World Islamic Index may be included in the portfolio and Momentum Securities will not conduct dividend purification.
“The fund is high conviction, invested in approximately 20 different companies in the healthcare, information technology, consumer-non-cyclical, industrial and real estate sectors. A third of the fund is currently in cash which enables us to take advantage of any investment opportunities we identify.”
“Ultimately this fund is targeted at individuals looking for global equity exposure from the MSCI World Islamic Index universe with a minimum of 5 years investment horizon. As with all investments which are higher risk, we encourage investors to seek advice before making any investment decisions.” Strydom concludes.