The Importance of Asset Allocation

The Importance of Asset Allocation

Owaiz Dadabhoy: Thank you all, again, for joining us for our monthly webinar. It’s an educational webinar. The Income Fund at Amana Mutual Funds started way back in 1986. And the Growth Fund started all the way back in 1994. Think about how long ago that was. And we still have customers that opened their accounts back from that time in 1986. They didn’t have an option to asset allocate. So, what we’ve done now is we’ve added a couple of more funds to be able to asset allocate and have a proper model for your portfolio. So, what we’d like to do today is introduce you to two of those funds. Those two new funds, relatively speaking, compared to our 1986 and 1994 funds. So, we have two speakers. We have Monem Salam, who’s been on our last three calls, as well. Monem is Executive Vice President and he has an MBA and he’s also a portfolio manager of the Amana Income Fund and the Amana Developing World Fund. He’s been with Saturna Capital for, I think, just over 16 years now. So, he’s a lifer here at Saturna, which is, of course, home of the Amana Mutual Funds. And then we have Patrick Drum, who joined us over 5 years ago. He was at UBS formerly... has a deep, deep knowledge of bond markets and that’s what has helped us with the sukuk fund, which he’s gonna explain to us today. He does have an MBA as well and hopefully he will be a lifer with Saturna as well. So, I wanna get it started off. I want to ask Monem to tell us about the evolution of the Amana Mutual Funds as we now have four Funds that are based on Islamic principles, and also talk about the inclusion of ESG in the different strictures that we’ve adopted.

[Narrator – Disclosure reading]: Performance data quoted herein represents past performance and 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 significantly higher or lower than data quoted herein. Performance current to the most recent month-end can be obtained by visiting www.amanafunds.com or by calling toll-free 1-800-728-8762. Please consider an investment’s objectives, risks, charges and expenses carefully before investing. To obtain this and other important information, which you should carefully consider before investing, about the Amana Funds in a free prospectus or summary prospectus, please visit www.amanafunds.com or call 1-800-728-8762.

Monem Salam: Thank you very much, Owaiz, for allowing me to speak here today and thank you everyone for your time, for spending an hour with us to be able to get educated on asset allocation. So, very quickly, you know, the evolution of the Funds. I mean, the Income Fund, which was started in 1986, the objective of the fund was current income and capital preservation. And the idea was that the founders, Dr. Mirza, Nick Kaiser, and a few other ones, were actually looking for an alternative to a savings account. And, at that time, there was no alternative except for putting money into the stock market that was halal. And they wanted to keep it more conservative, so they wanted to have income-producing securities. So, that’s actually how that Fund got started. Then, after, you know, about 8 years, they wanted to also be able to outperform the S&P 500. And so, thus the Growth Fund was started, to be able to have a balance between the income-oriented stocks that we have in the Income Fund, versus the growth-oriented stocks in the Growth Fund. And so that stayed that way for quite a while, almost close to about 15 years. And then, after a huge run-up in the emerging markets in the 2000s with China and other countries doing well, we did decide that, you know, part of the asset allocation mix for Amana should be a fund that was outside of the US. Now, both in the Income Fund and the Growth Fund, you actually get exposure to international markets, developed international markets, for example Europe, UK, maybe Japan. Those type of things. But there wasn’t a lot of exposure to emerging markets. Emerging markets are smaller countries and they usually have a higher growth rate and the companies are actually growing much faster. And that’s why we started, in 2009, we started the Developing World Fund. We’ll get into that a little bit later. And then also to round out our asset allocation, we never really had an equivalent to what people would call a fixed-income fund. And so, in 2015 we launched the Amana Participation Fund to be able to give you that type of an income. And, along the way, you know, we have our Islamic criteria that we use... not investing in any industries that are haram, also looking at the debt screens. But, we also kind of formalized our environmental, social, and governance screens. Basically, what we do, and Patrick is really much more of an expert than I am in this area. But you know... environmentally, we’re looking at how companies do when it comes to recycling, are they carbon neutral, all those things. And the governance side we’re looking at diversity of the board. We’re looking at those issues, whether or not they’re independent or not. So, those are the types of things we do. Another way to put this from a Muslim perspective would be that the traditional screens that we’ve had would have a negative screen. So, it would be akin to maybe saying, from the verse of the Qur’an, forbidding evil and then the ESG screens are more of a positive screen and from the Qur’anic perspective, the same hadith talks about enjoining the good.

Owaiz Dadabhoy: Very good, so we have two different standards that we’re following. One is from 1986, one from a little bit later. And obviously, the Islamic principles really can be used by anyone because it’s just taking out certain types of industries and companies. So, tell us a little bit about asset allocation and why it’s important, from your point of view.

Monem Salam: Yeah, so I’ll just give you a really short example and that is, you know, if you’re actually going up an elevator...right? A question would come, would you rather have, going up the 20 flights of the building, would you rather have one rope that’s pulling you up, or would you rather have four or five? Right? Just in case one of the ropes break. You don’t have any choice if you’re only on one. So, that’s one of the reasons why you want to have an asset allocation: so that not every investment in the market, not any investment that you have, is actually going to do as what you were expecting it to do. So, there are times when value is better than growth. There are times that domestic will be better than international. There are times when stocks will be better than sukuk and vice versa. All of these things would be vice versa as well. And so, you want to be able to have that diversification. Now, how much diversification you have... percentage allocated to each of these... really depends on your time horizon and your risk tolerance. But, generally speaking, it’s really a matter of not having all of your eggs in one basket.

Owaiz Dadabhoy: So, you know, if we’re trying to asset allocate. We’re trying to do it from home. We have multiple accounts open at Saturna, maybe elsewhere that you’re gonna look over to bring to Saturna. What kind of tools do you have right now that make it easy for the individual investor?

Monem Salam: On our website, you can actually go and there is something called the Amana Fund Selector. The website is being shown right now. So, if you actually tale it... it’s about 8 questions that you have to answer. And again, it’s gonna assess your risk tolerance, how much are you willing to risk or lose in order to get a higher rate of return. And it also talks about time horizons and those type of things. Then, it comes up with an asset allocation. What percentage of each of the Income, Growth, Developing World, and Participation Fund you should be investing in. So, generally speaking, what you really find, and a good rule of thumb is that if you’re conservative, meaning you don’t want to lose money, or you have a shorter time horizon, you’re gonna be much more weighted toward the Participation Fund. And then, if you have a long-term time horizon and you are able to take a lot of risk then you’ll be much more weighted in the Growth and Developing World Fund. And then, the rest of the mix is gonna be depending on where in the middle you actually lie.

Owaiz Dadabhoy: Okay, you mentioned risk and in previous webinars we’ve talked about smart risk, and so when we’re talking about this, we’re also talking about educated, smart risk. Okay, so yeah, the website is being shown there. It shows the four different Funds. It shows your halal podcast where people can learn a little bit more about different subjects. I think we have 4 loaded on the website. Also, the Amana Fund Selector. You just basically click on “try it out” from the Amanafunds.com website or Saturna.com and it will take you five to seven minutes. At the end of it, if you want to print the results you can do that and connect with us. We’ll give you our phone numbers at the end, or you can just start to make those changes by calling us at Saturna and we’ll help you with that. You can also do this within your 401(k) at work and that’s one of the questions that came up... is, you know, can you do this outside of Saturna? Yes, you can use the Amana Fund Selector then buy the Amana Funds or something similar if you don’t have Amana Funds within your 401(k), your brokerage account. So now, let’s talk about the actual Fund that you manage, which some people may not be invested in yet because they don’t know about it, which is the Amana Developing World Fund. You mentioned it started way back in 2009 right after the Great Recession in 2008. So, tell us a little bit about that fund.

Monem Salam: Thank you. So, the Amana Developing World Fund, you mentioned, started in 2009. The objective is long-term growth. And what we’re looking for is basically exposure to up and coming markets and companies around the world. So, what that means is that not only are we going into Malaysia or going into Saudi Arabia or going into Eastern Europe or Latin America and picking out the fast-growing companies in those countries, but also one of the unique features about this fund is that as long as the assets or the revenues of the companies, even if they’re based in the US or in Europe, as long as more than 50% of their revenues or their assets are based in emerging market countries, then we are allowed to purchase them as well. So, we’re basically we’re scouring the world. We’re looking for these companies. Obviously, they’re halal and also ESG compliant. But then, we’re looking for those companies that really, in the long term, will be able to outperform the benchmark which is the MSCI Emerging Markets Index.

Owaiz Dadabhoy: Okay. So, when you talk about, just to slow that down for a second, you said companies in the United States that do business in the developing world or the emerging markets... they have to do more than 50% of their business there. So, can you think of any example of a company like that?

Monem Salam: Sure, a really quick example I’ll give you is one of Qualcomm. Qualcomm is based on San Diego. They make chips for phones. They do have the 5g technology as well. But actually, if you look at their revenue breakdown, more than 50% does come from emerging markets, including China. And so, Qualcomm is in the portfolio for that reason even though it’s based in the US.

Owaiz Dadabhoy: So, again, you’re getting names that you may already know as a consumer. You already know about Qualcomm. What about a name that people would know about that’s from the emerging markets directly?

Monem Salam: I think, probably, one of the larger holdings that we have is a company called Tencent. Tencent is actually an online company. They have the world’s most popular chatting software called WeChat and actually has quite a bit more users than even WhatsApp does. And so, WeChat is one and they’re also into online gaming. So, they make a lot of very popular online... for the phone they make computer games. Gaming not as gambling, obviously, that would be haram, but gaming as in video games that they’re actually making. So, Tencent is a very large holding and that’s also a very popular one as well.

Owaiz Dadabhoy: Okay, so... people don’t need to know every holding of these funds. That’s why you hire a fund manager like yourself who’s been doing this for a long time. If people do want to see... they want to get some comfort from what companies are out there. Where can they find the stock holdings of that fund?

Monem Salam: Sure, if they go to our website and look up Amana Developing World Fund... you can do this for all of them. There is a section in there that you can actually view all the holdings in the fund and the percentage of each of the holdings that we do have.

Owaiz Dadabhoy: Okay, so if you want to do that you can certainly look on our website. There is so much information on that website. You can spend a day on there if you wish. Don’t need to, but you can. Okay so I want to move to Patrick. Thank you, Monem. Patrick, the Participation Fund is about to celebrate the 5^th year anniversary I believe next month.

Patrick Drum: Correct.

Owaiz Dadabhoy: So, tell us what makes this unique because most people haven’t even heard what a sukuk is. So, what makes it so unique?

Patrick Drum: Yeah. First, it’s a pleasure to participate and join in the call and thank you. Participation Fund is the very first of its kind in that it incorporates all the attributes of what is considered a conventional bond fund in that it prioritizes capital preservation and current income but only owns Shariah-compliant securities. That is, Shariah-compliant income. And this is a means, essentially, for investors to prioritize the safety of their savings while seeking a competitive rate of return. I think a little credit here, or a little background, might also offer context. Prior to my arrival... I’ve been here about six years and yes, thoroughly enjoy it, lifer. But one of the things is given both Owaiz and Monem’s longtime contribution to the company and the perspective and vision and having the conversations and involvement in the community, a large number of our clientele is what I call “at that age and stage.” And they’re not able to take on the full asset allocation concentration in equities and need ways of diversifying and providing a means that’s gonna allow pockets of their savings to obtain a more conservative, prudent, prioritizing safety while obtaining a current income that’s just not going to be offered in the equity markets. And as a result, the Participation Fund is aimed to provide that landing place for investors that when things go bump in the night, the Participation Fund is aimed simply to kinda provide that measure of safety.

Owaiz Dadabhoy: Okay. And so, if someone goes to the Amana Fund Selector and they come up as really conservative, the allocation will be 50% toward the Participation Fund...

Patrick Drum: Right.

Owaiz Dadabhoy: But if somebody goes to a financial advisor at another large company... I won’t name any. But some company that you know of that has investment advisors, they say, “Look I’m 50 years old, here’s my risk tolerance.” And so they say, “You know what? You’re gonna need 50% in bonds.” Right? So, when we created the Participation Fund, it was meant to help investors that do not want to invest in interest type securities or bonds, specifically. So, how is the bonds and the Participation... how do they correlate? And what are the differences between the two? 

Patrick Drum: It’s a good question. It’s a question that, over the years in having both worked with you, Owaiz, and Monem... I call it sidewalk talk. And what I mean by that is I learn a lot about questions and concerns that sometimes I’m not able to answer at that time, so there’s a lot of white papers and other content and a video that came out this. About what makes a sukuk halal. I remember having conversations about individuals asking about, well, isn’t a municipal toll road bond halal? And the answer is no. In fact, there’s an article about that on our website. And it’s in part because there’s a lot of education to this security. I will share... It’s a small market in the sense that sukuk is not an everyday word that we’re gonna be aware of but let me give you context. It is actually a very large market. The sukuk market, globally, is larger than the European High-Yield market. It’s in excess of over half a trillion dollars in size. So, there is a lot out there. But what makes it unique? It’s structured and looks like a bond, so I say it looks and acts like a duck. It has a lot of the characteristics of conventional bonds, but it just doesn’t quack. It has its own swag, we’ll call it. And what’s important about it is that there are four attributes about it that make it unique and distinct. Put in the simplest terms, I call it the four legs of a chair that really make it. The first that embodies it is a risk-sharing component. Unlike conventional bonds, sukuk investors have a risk-sharing component, which means that they have to share in both the profits as well as the potential loss or risk. Bond holders have a contractual obligation where they’re going to receive their income heck or high water. The second attribute is that as a sukuk owner, you actually own assets. As a bond holder, you’re a creditor. You’re essentially obligated as per contract to get your income. The third component with the sukuk is that there can’t be any guarantees of your return of principal or that income. Well, again, with bond holders, it’s contractual obligation. So, under these three points, right in the beginning, is that sukuk holders have to take risk. You’re owning an underlying asset and there’s no contractual guarantees. Everything which is unique and distinct by a bond. And lastly, most importantly, every sukuk, every sukuk, I want to stress, that’s been placed in this portfolio, and any sukuk, has gone through a Sharia advisory board. It’s had its own fatwah. A toll road in a municipal bond will not get a fatwah. And there’s other aspects that come to mind. And that’s what makes it very similar to a conventional bond and it’s structured so that institutions and others like myself can think about how to price it and how it’s traded.

Owaiz Dadabhoy: Okay, thank you for that. You mentioned some videos on the website. If you go to Amanafunds.com and you go to the Participation Fund, you’ll find a three-minute video. On there you’ll find the differences between bonds and it just makes it very easy to see what the difference between the Participation Fund, sukuk are compared to bonds. There’s also an interview that I conducted of Patrick a couple of years ago that’s also on the website. So, check that out if you have more questions and at the end of the presentation, we’ll give you a few more numbers to contact, emails and phone numbers, if you wanna reach out to us directly. Going back to Growth and Income. Income, 1986. Growth Fund, 1994. They’ve been talked about in articles. They’ve had, this is subjective on my part, but you can look up the numbers yourself, but they’ve had a very good track record of portfolio returns over time. They don’t have positive numbers every year, but you know, when you look into the long term, they have had very good numbers, especially when you compare to the S&P 500. Either right there, in certain years, in certain 5-Year, 10-Year periods, so I’m being careful how I say this, but you know, I want you to take a look at the portfolio returns there. So, you know, the returns there have been very good for most investors so why would they want to come to the Developing World Fund now? Over the last 10 years, the Developing World Fund has not performed as well. What would be the reason for that?

Monem Salam: So, there are a few reasons. One, we talked about earlier, which is about asset allocation. Right? So, you want to be invested in companies from around the world, not just in the US or not just in Europe or those things. And that’s the first thing is to be able to be diversified in asset allocation. Number two is when the emerging markets do well, they do really well. But when they do poorly, the end up really poorly. So, if you look at the average rate of return over the 2000s, you’re looking at high double-digit numbers as to how well they did. And then, after that, because of multiple different factors, you know, a stronger US Dollar, 0% interest rates, everything that was going on this decade post the GFC, the Financial Crisis of 2008, you’ve had basically ten years’ worth of lackluster returns relative to what the US has done. Okay? However, two reasons why you would wanna have allocation here. One thing is there might be a reversion to the mean. The second part of it is if you look at valuations, you’re gonna find very good valuations in the emerging markets, sometimes even better than the ones in the US. What I mean by that basically  is that you want to be able to, if emerging markets haven’t done well over the past decade, you want to be able to buy low and hold until it goes higher. Not, for example in the US, where it’s already high, and yes it could go higher, but again, you’re buying higher and hope that it goes even higher than that, whereas in the emerging markets you can go find this value. You can buy into these companies and you can actually hold them for the long term. There’s another shift that I want to talk about that’s happening to the world, if you don’t mind Owaiz.

Owaiz Dadabhoy: Sure.

Monem Salam: And that’s traditionally, even in the 2000s up until very recently, there were four different industries in most emerging markets that actually ended up doing really well. Alright? Number one was oil—oil and gas—insurance, banking, and telecommunications. So, traditionally, emerging markets for Islamic investors and ESG investors was off limits because banking and insurance you cannot invest in. Telecommunications is high debt. And oil and gas are a no-no from an ESG perspective. Right? But recently, what’s happened is because of the growth in the middle class, growth in technology, there’s been a shift and so then there’s now a lot more companies in the technology area, we mentioned Tencent, than in the past. And so there’s also been a shift also with the rising middle class into consumer discretionary and consumer staple companies. So, you have a lot more of a pool to be able to invest in that’s liquid that takes advantage of the emerging markets and the rising middle class and so that’s where the next decade looks a lot more exciting than probably the past decade was.

Owaiz Dadabhoy: So, I wanna move back to Patrick for a quick second. So, you know, the Developing World Fund is in emerging markets. How about the Participation Fund? Which markets is that in?

Patrick Drum: Because the fund invests in Sharia-compliant securities, it tends to originate in regions of the world that are predominantly of the Islamic faith. So, that represents Asia, the Middle East, and so as a result, by its qualification of the issuers, it is an emerging market fund exposure. I want to also put a bit of a preface to that. It doesn’t necessarily mean that because it’s in emerging market that therefore it’s always going to be risky. A large part of these issuers, in context, have really high credit ratings. Example: Qatar, Abu Dhabi, are both AA rated. That’s the equivalent of the United Kingdom. Saudi Arabia is A-. That’s also in line with China. So, there’s quite a few reasons both for what I call, and it’s in a recent publication, “plenty in the bank, plenty in the tank,” meaning they have a large about of capital reserves and hydrocarbon reserves that provide these really, very strong capital ratings. It still doesn’t eliminate that this also, because it’s emerging market, has other unique risks. But even as emerging markets, and that’s essentially where these Islamic securities are being sourced from.

Owaiz Dadabhoy: Okay. So, lot of emerging market sukuk issuances. How many of them are in the United States so far?

Patrick Drum: There are a few but they don’t have the liquidity and there’s a lot of things that we need to also take in mind. Just because it’s an issue that happens to come from a certain geographic area... our team does such a tremendous job, and credit to the whole team, deep credit research. When you want to make certain it’s liquid. Because the priority is to provide that airbags and seatbelts... Even though there’s some issuer that are outstanding, we just don’t find it to be the fit that we’re looking for to provide both the liquidity and safety that we’re looking for. Doesn’t mean there couldn’t be bumps on that road. What we’re trying to do is soften that.

Owaiz Dadabhoy: Monem, I have a question for you. Can every investor look at both of these funds?

Monem Salam: Anybody can actually purchase the Funds and be allocated into them. I know the Participation Fund has a higher initial limit. It’s a $5,000 initially to be able to get in but it shouldn’t stop anybody from doing that. And then also the Developing World has the same as the Growth and Income Fund.

Owaiz Dadabhoy: So, let’s say... I already had my two kids—14 and 18 now—but let’s say I had another child somehow, but this kid is just born, and I want to open an Education Savings Account or a minor account for them. You could do either one of them, and I’m willing to take risk because I’ve invested before. I’ve been investing for a long time. What could the allocation look like there for someone opening up an education savings account for a newborn baby?

Monem Salam: Yeah, so that brings the Amana Selector right back into the discussion because I think it’s not only about the time horizon but also the risk tolerance, meaning that how much are you willing to lose to be able to get that extra return on the upside. And so, what I would say is definitely if you have a longer term time horizon you can weather out the dips that are gonna happen in the market. And the market will always come down. It’s not always in a straight line. And so there will be periods, especially within an 18-year time horizon that the market will come down and maybe start to rally again. So, there are two things that are in your favor. Number one if you’re investing in an ESA or a UTMA is that you have a long time horizon. Number two is that you’re gonna be adding money on a consistent basis. So, dollar cost averaging. And so, for those two reasons, I would probably say that your allocation should be a little bit more aggressive and what that means is that you have much more weighting toward the Growth and Developing World Fund than Participation and Income.

Owaiz Dadabhoy: I mean it’s great that we have these options where we can pick and choose which funds based on our risk tolerance and time horizon. The day is finally here where we can all do that. I know some older people in my community—70, 80 years old—and they had all of their money in the Amana Income and the Amana Growth Fund before. So, you know, when you think about your parents, your grandparents, they really should be looking at the Participation Fund, and for those that have never invested in emerging markets, this is the opportunity to take a look at that. Again, go to Amanafunds.com and click on the Fund Selector. Please ask any additional questions. We’re gonna start getting to some of your questions right now. One other question, Monem, would be along the same lines, right? You have a 40-year-old. They’re gonna retire at 65, hopefully sooner, but let’s say 65 years of age. Is the answer about the same as what you would do in the Education Savings Account?

Monem Salam: I mean, 25 years is a long time. So, I would say it would be very similar. It would be, again, I mean if it’s a retirement account you’re gonna be putting in money on a monthly basis or at least on a yearly basis. And 25 years is quite a bit of time. In fact, if you think about 25 years ago, starting from this point, where were talking in the middle of 1995 when emails were first beginning to come out, right? When Bill Clinton was coming up on his second term or fighting for a second term... long time has passed. A lot of things have changed. And so, if you look at it between now and 25 years from now, the same thing is gonna happen. So, would you rather be in companies that are gonna be slow and steady, which is more the Income Fund, or would you rather be in the next Facebooks and the Googles and those type of things that’s more in line toward the Growth Fund. And not only those but the Tencents and the ones that are manufacturing the chips and those type of things, that are in the Developing World Fund. So, I would probably say you want to be weighted more toward those—the technology and the higher, faster going funds---at least initially, rather than go slow and steady kind of funds. The one thing that I did want to add, Owaiz, if you don’t mind, and this might be another advantage for those of us that are Muslim and investing in the funds although anybody can invest in these funds, is that this is also a way... the Developing World... you know, the majority of the Muslim world, the majority if not all of it is in the emerging markets, what is called emerging markets. So, one way for us to be able to take exposure or have exposure to our quote/unquote home countries is to be able to invest in the Developing World Fund as well.

Owaiz Dadabhoy: Okay, so let’s take a couple questions here. “Would the Amana Funds consider investing in China and UAE, KSA issuances or stocks for that matter?” And I’ll just quickly just mention that, look, yes there are some issues with those countries for sure. We’re talking about individual issuances, here, we’re talking about individual stocks, we’re not talking about supporting a government, so we’re looking at each issuance, each company for their environmental, social, and governance and the responsibility on us is on that part of it and not necessarily the government itself. I mean, I feel the same way about some of these countries and regions. Another question for you is, “Can we transfer from one fund to another without actually selling and purchasing back.” Monem, so this one is let’s say you have, you know, 50% Amana Growth to 50% Amana Income and you went to the Amana Fund Selector and it tells you to put a percentage in Developing World Fund and Participation Fund, how would you go about doing that?

Monem Salam: Yeah, thank you, so the quick answer is you can’t just transfer the shares from a tax basis. You can easily call us up and say, “Can you move 20% from the Growth Fund into Developing World or 10% Income Fund into Participation?” That’s very easily done. But keep in mind that there is a buy and a sell going on, and in this particular case a sell and a buy. And so that sell, it’s possible if it’s not in a qualified account, like an IRA or an ESA, could be generating some capital gains for you. So, do keep that in mind. Some ways to get around that, you know, especially if you’re in an IRA, I would tell you is that you know, maybe if you only have Growth and Income but you do want exposure to Developing World and Participation, then any new contribution that you put in, then maybe put those new contribution into Developing World and Participation until you get to the point where it’s properly asset allocated. And not maybe as important in a qualified account because there’s no tax consequences, but if you do have an asset allocation in the taxable account, then that would be something that you wanna consider. However, that all being said, I wouldn’t let tax be the driver of your returns or the driver of your decisions. Right? Tax is a consequence of you making money, which is a good thing. Right? And so, tax should never be put over and above the idea that you have been blessed being able to make that money in the first place.

Owaiz Dadabhoy: Very good point. One other, I recently did some reallocation in a taxable account. One of the things that you can do is if you, let’s say you have $50,000 in a taxable account, either for yourself or a minor account. Those are both taxable. You could make a phone call into us and say look, I want to move $5,000 into Developing World and $5,000 into Participation Fund. You can tell them to use the last purchases first because those are the ones that have the least amount of gains. So, if you bought something ten years ago, you might have a lot of gain there. Use your last purchases to come out first. It’s called “Last in/First Out.” You can certainly do that. Let’s see, “Is there a program for buying a house for the first time?”

Monem Salam: So, the only program that we have for buying a house is, you know, every house that you buy has to have a down payment. And so, you can use the Amana Funds to be able to save up for the down payment for that house. And, if you have some saved up already and you’re thinking about buying a house within, let’s say, one year or less, then again, going back to the asset allocation, you are much better to be in the Participation Fund. If you’re just starting out saving and you’re gonna have a five, six-year time horizon before you have enough of a down payment, then I would go a little bit more aggressive with the Growth Fund, the Developing World Fund, and then the Income Fund as well. But that’s really it. We don’t actually lend money—we’re not a lender of money. We’re an investor of money, so we will take your money and invest it on your behalf, but we won’t give you money to be able to purchase a house.

Owaiz Dadabhoy: And are there companies they should be looking at, without naming names, there are ways to do this in an Islamic way?

Monem Salam: Absolutely there are a lot of ways. You can google “Islamic housing” or something along those lines and you should be able to pull up the few that are in the US.

Owaiz Dadabhoy: Thank you for that. So, I want to thank Monem. I want to thank Patrick. Most importantly I want to thank the folks that stayed on with us for an hour. We really appreciate you. I’m gonna give you my email address. It’s on the screen. You should be able to see it. If your question didn’t get answered, shoot me your question on that email address. Also, if you want something specific to be done in a future webinar, because we’re gonna do this once a month. If you want more information, I would check out the videos first on our website and also the podcast which Monem has been hosting. We have, I think four of them right now, maybe more. And those really get in-depth and I think you’ll enjoy that. You can put that on your phone and listen anytime. So, thank you very much. We hope to connect with you even more often and we look forward to your questions. Thanks everyone, have a great rest of your day.

Monem Salam: Thank you.

Patrick Drum: Thank you.

Owaiz Dadabhoy: Take care.