The world’s first actively managed global equity Sharia-compliant exchange traded fund (ETF) will list on the London Stock Exchange on Wednesday, as it looks to capture investor interest from the Middle East and UAE.
The ETF from UK financial services group Almalia aims to achieve capital growth over the medium to long by investing in companies with high returns on capital and low leverage. The asset management and investment screening – to ensure the product remains Sharia-compliant – will be supervised by Sanlam Investments UK, which oversees £5.3 billion in funds.
The ability for an active manager to add value versus the global equity Islamic index is something the market needs – it's an underserved market.
"The status quo in the ETF market has always been to track some sort of index but actively managed will allow us to outperform the MSCI Islamic Global Equity Index. Our long-term track record has demonstrated a significant outperformance over time," Pieter Fourie, global head of equities at Sanlam, told The National. "The ability for an active manager to add value versus the global equity Islamic index is something the market needs – it's an underserved market."
ETFs are bought and sold like shares but typically operate as index-tracking funds, passively following a chosen index, such as the S&P 500 or a commodity like gold. The financial products come with zero upfront fee and annual charges as low as 0.07 per cent, giving investors more of a return as actively managed funds charge around 1.5 per cent to 2 per cent.
The Almalia Sanlam ETF, however, comes at a slightly higher total expense ratio of 0.99 per cent.
“The average ETF will be around 40 to 50 basis points so the notion they are always cheap is not quite correct there, so our fee comes in just below 1 per cent - significantly lower than most actively managed Islamic equity active funds, but a little bit higher than your typical ETF," said Mr Fourie.
While analysts welcome more choice for Islamic investors, just because something is Sharia-compliant "doesn't mean it is the right choice for your investment portfolio” said Steve Cronin, founder of deadsimplesaving.com, an independent community for financial education in the UAE.
“A quick glance at Standard & Poor's Spiva scorecards shows that most active funds underperform their benchmark index, typically by about the size of their fund management fees," Mr Cronin said. "Screening for Sharia compliance does have a cost associated with it: the iShares MSCI World Islamic ETF has fees of 0.6 per cent compared to 0.2 per cent for iShares' non-Islamic version. But with fees of 0.99 per cent, the Sanlam active ETF will have to significantly beat its benchmark over the long term to justify its fees.”
Assets invested in global ETFS and exchange traded products broke through the $7 million milestone at the end of August, according to research and consultancy firm ETFGI. The financial products gathered net inflows of $55.18 billion in August, bringing year-to-date investments to $428.25bn, significantly higher than the $272.62bn gathered at the same point last year.
The Active Sharia Global Equity ETF, which currently invests in 23 companies specialising in healthcare, consumer staples and IT, will target institutional investors such as pension funds, large family offices in the UAE and wider Middle East, Mr Fourie said, with other target areas including Malaysia and Mauritius.
While Mr Fourie, who has 22 years of experience managing money and is supported by six investment professionals, says there are “no guarantees” in the investment world, he is confident his expertise will help the ETF not only beat the benchmark, which tracks 300 companies, but also attract a myriad of investors, including non-Muslims. The product will also be listed in Germany and Italy.
“You do get investors in the UK, for example, that will invest because they like the nature of the fund. Maybe they don’t like companies that have gambling exposure so therefore it’s suitable not only for Islamic investors but also for investors that feel that the nature of their underlying investments suits their own beliefs,” he said.
However, Mr Cronin said: “Active ETFs are shiny new objects designed to mask the decline of an industry in crisis, as more and more people realise that active fund management isn't particularly good for your money.”
The biog
Favourite Emirati dish: Fish machboos
Favourite spice: Cumin
Family: mother, three sisters, three brothers and a two-year-old daughter
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
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MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium, Malayisa
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia on October 10
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Specs
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Zayed Sustainability Prize
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Mobile phone packages comparison
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Impact in numbers
335 million people positively impacted by projects
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Top investing tips for UAE residents in 2021
Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.
Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.
Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.
Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.
Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.
Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.
Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”
Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.
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Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Juvenile arthritis
Along with doctors, families and teachers can help pick up cases of arthritis in children.
Most types of childhood arthritis are known as juvenile idiopathic arthritis. JIA causes pain and inflammation in one or more joints for at least six weeks.
Dr Betina Rogalski said "The younger the child the more difficult it into pick up the symptoms. If the child is small, it may just be a bit grumpy or pull its leg a way or not feel like walking,” she said.
According to The National Institute of Arthritis and Musculoskeletal and Skin Diseases in US, the most common symptoms of juvenile arthritis are joint swelling, pain, and stiffness that doesn’t go away. Usually it affects the knees, hands, and feet, and it’s worse in the morning or after a nap.
Limping in the morning because of a stiff knee, excessive clumsiness, having a high fever and skin rash are other symptoms. Children may also have swelling in lymph nodes in the neck and other parts of the body.
Arthritis in children can cause eye inflammation and growth problems and can cause bones and joints to grow unevenly.
In the UK, about 15,000 children and young people are affected by arthritis.
SQUADS
Pakistan: Sarfraz Ahmed (capt), Azhar Ali, Shan Masood, Sami Aslam, Babar Azam, Asad Shafiq, Haris Sohail, Usman Salahuddin, Yasir Shah, Mohammad Asghar, Bilal Asif, Mir Hamza, Mohammad Amir, Hasan Ali, Mohammad Abbas, Wahab Riaz
Sri Lanka: Dinesh Chandimal (capt), Lahiru Thirimanne (vice-capt), Dimuth Karunaratne, Kaushal Silva, Kusal Mendis, Sadeera Samarawickrama, Roshen Silva, Niroshan Dickwella, Rangana Herath, Lakshan Sandakan, Dilruwan Perera, Suranga Lakmal, Nuwan Pradeep, Vishwa Fernando, Lahiru Gamage
Umpires: Ian Gould (ENG) and Nigel Llong (ENG)
TV umpire: Richard Kettleborough (ENG)
ICC match referee: Andy Pycroft (ZIM)
