Muslim Investors Top 2005 Faith Funds Table

In a year when the Standard & Poor's 500 index has nudged up barely 5 per cent, investors would have done better by investing according to the principles of the Koran.
Among the small but rapidly growing band of faith-based mutual funds, the main US Muslim fund has beaten funds run according to the principles of the Catholics, the Mennonites, the Presbyterians, and the evangelical Christians. In fact, with the $100m (£58m, €84m) Islamic Amana Growth fund posting a 22 per cent return for the year, they have pretty much beaten everyone, according to data provided by Lipper.
Amana Growth and its sister fund, Amana Income, avoid investing in any company that derives more than 5 per cent of its revenue from alcohol, tobacco, pornography, gambling or the sale of pork. It sold stock in Albertson's, a grocery chain, when alcohol sales began to edge close to 5 per cent of revenue. The Koran's ban on money lending also eliminates most financial institutions. Morningstar, the fund tracker, notes that Amana keeps stock turnover low because the Koran warns against speculation. Apple, Qualcomm and Adobe are big holdings.
Another small fund aimed at the large US Muslim community, the Allied Dow Islamic index, has reaped only 6.9 per cent for the year. It invests 80 per cent of money in various Dow Jones Islamic indices, with the remainder actively managed.
The Timothy Plan, which appeals mainly to evangelical Christians, has a clutch of funds that avoid alcohol, tobacco, gambling, abortion, pornography and also any companies that advertise on shows which feature sex or violence. Its biggest, the Large to Midcap Value Fund, has scored a return of 17.5 per cent, this year after underperforming for some time.
Among the rest of the pack, the Ave Maria Catholic Values fund - the flagship of four Ave Maria funds which hold a total of $400m - has returned 6.3 per cent for the year. It avoids investing in companies that facilitate abortion, donate to Planned Parenthood, are involved in pornography or offer same-sex partner benefits. That last requirement eliminates about 200 of the 500 companies in the S&P.
New Covenant, the Presbyterian mutual fund which, with $2bn under management, is the heavyweight of the faith-based world, and MMA Praxis, the mutual fund arm of the Mennonite Church, have performed largely in line with the market. Both have more in common with socially responsible investing, avoiding companies that make firearms or that cause environmental damage as well as screening out gambling and alcohol-related companies.
The tiny Vice Fund - which actively invests in alcohol, tobacco, gambling and so on - has returned less than 5 per cent. (Courtesy The Financial Times Ltd)


Editor: Akhtar M. Faruqui
2004 . All Rights Reserved.