December 16, 2019 – Saturna Capital, adviser to the Amana Mutual Funds Trust, has published its inaugural Amana Funds 2019 Impact Report. The report, which focuses on Amana Income and Amana Growth, presents data and case studies highlighting a “mosaic approach” to integrating broader environmental, social, and governance (ESG) considerations into Amana’s disciplined, halal investment process. The case studies illustrate how Amana’s investment process considers industry-specific material factors in selecting securities and as part of ongoing portfolio management.
“Amana’s inaugural Impact Report aims to demonstrate the sustainable characteristics inherent in halal investing while bringing more details of our process to light,” said Jane Carten, president of Saturna Capital. “Our data, as well as third-party assessments, have shown high compatibility between Amana’s low-debt, socially conscious investment approach and ESG investing principles.”
Investors have begun to take notice of the functional overlap between the security screens used in sustainable, responsible, and impact (SRI) investing and Islamic investing. A 2019 research report published by the CFA Institute, a global association of investment management professionals, points to “an ethical bridge between Islamic finance and SRI investing…built upon a shared concern about society and the environment.” The Institute’s report notes, “We find modern examples of financial services providers who have been able to create offerings that both meet Islamic prohibitions and take into account ESG considerations…A notable example is Amana Mutual Funds in the United States.”
“People know about the Funds’ faith-based aspects but are less well tuned-in to the fact that these Funds also incorporate ESG considerations,” said senior investment analyst and report co-author Levi Stewart Zurbrugg. “Our Impact Report tells the story of the benefits of that relationship.”
Patrick Drum, MBA, CFA®, CFP®, portfolio manager of Amana Participation Fund, describes the Report as “a critical communication tool providing transparency into the investment process” and adds, “We expect this process and our future Impact Reports to evolve over time.”
Established in 1986 as the first mutual fund family to offer a halal investment option to Muslim American investors, the Amana Funds have been managed according to Islamic finance principles since inception. In the interest of transparency and recognition of Amana’s longstanding commitment to sustainable, values-based investing, Amana Income, Amana Growth, and Amana Developing World Funds include sustainable investing mandates in their prospectuses. The Amana Participation Fund, an Islamically acceptable fund that provides diversification via halal income from sukuk, does not have an explicit sustainable mandate, although it does include “green sukuk” in its portfolio.
The Amana Funds limit the securities they purchase to those consistent with Islamic and sustainable principles. This limits opportunities and may affect performance.