Kiplinger - 5 Great Funds for a Down Market

Monem Salam MBA, Executive Vice President and Portfolio Manager

May 8, 2020 – Kiplinger has published “5 Great Funds for a Down Market” that features  Amana Growth Fund.

Author Ryan Ermey, associate editor at Kiplinger’s Personal Finance, addresses concerns of risk-averse investors by compiling a list of funds that historically have held up in difficult markets. “By surrendering less when the market flounders, they’ve each built market-beating track records over the long term,” he said.

Ermey looked at which large-company stock funds held up better than the S&P 500 Index during each of the five market downturns of 15% or more since the bear market of 2007-2009. Amana Growth Fund’s long-term performance and resilience to volatile markets stood out. “Over the past 15 years, the fund’s 11% annualized return walloped the S&P 500 by 2.4 percentage points, with less volatility,” he said.

Ermey credits Amana Growth Fund’s conservative, sustainability-focused investment process with softening the blow from market shocks. He notes that Amana Growth performed particularly well during the 2008 financial crisis when it “didn’t own a single bank.”

The Amana Growth Fund adheres to Islamic principles, which gave it an advantage during the Global Financial Crisis when banks and financial firms were particularly hard hit. Islamic principles require that investors avoid interest-based banks or finance associations. Other prohibited businesses are alcohol, pornography, insurance, gambling, and pork processing.

Islamic principles also screen out heavily indebted businesses. Ermey spoke to deputy portfolio manager Monem Salam about the Fund’s focus on low-debt companies. “Investing in cash-rich firms with little debt pays off,” said Salam. “When stores close and you have to figure out how to pay employees, it helps to have cash on the balance sheet.”

More recently, the Fund’s environmental, social, and governance (ESG) investment screens have helped to limit losses. Ermey notes how “the fund’s aversion to energy firms” helped to dampen the market effects of plunging oil prices during April this year. Amana Growth’s investment process seeks sustainable companies with robust ESG policies. Saturna Capital, the Fund’s investment adviser, uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses, including fossil fuel extraction.

Monem Salam, MBA, is Executive Vice President of Saturna Capital. He joined Saturna in 2003. He is portfolio manager of Amana Income and Amana Developing World Funds.

Kiplinger is a print and online publisher of business forecasts and personal financial advice, including The Kiplinger Letter and Kiplinger’s Personal Finance magazine.

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Average Annual Total Returns

As of March 31, 2020 Ticker 1 Year 3 Year 5 Year 10 Year 15 Year Expense Ratio1
Amana Growth Investor Shares AMAGX -2.19% 11.55% 9.88% 10.65% 10.02% 1.03%
Amana Growth Institutional Shares AMIGX -1.95% 11.83% 10.14% n/a n/a 0.79%
S&P 500   -6.98% 5.10% 6.72% 10.52% 7.57% n/a

1 Expense ratios shown are as stated in the Fund's most recent prospectus dated September 27, 2019.

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Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than performance data quoted. Standardized returns current to the most recent month-end can be obtained by visiting our Month-End Returns Page or by calling toll free 1-800-728-8762.

The Amana Growth Fund limits the securities it purchases to those consistent with Islamic and sustainable principles. This limits opportunities and may affect performance.