Islamic fund's adviser push

The managers of New Zealand’s first Islamic KiwiSaver fund are keen to talk to advisers who would like another option to offer their clients.

Monday, February 2nd 2015, 6:00AM

by Susan Edmunds

The Amanah KiwiSaver Plan has been registered for business since mid-last year but barrister Brian Henry, who operates the fund, said it had been collecting members on the basis of word-of-mouth referrals.

Saturday marked the official launch of the fund with fewer than 200 members so far. Henry said there had been a delay putting the finishing touches on the Islamic advisory board, which includes two sheikhs.

“There’s a gap in the market and we believe we can fill that gap.”

He said Amanah had already been talking to one group of advisers who wanted to be able to provide it as an option to their Muslim clients. “We will work with advisers around the country who want to offer it as a second option, it’s a genuinely different option,” he said. “Most other KiwiSavers tend to be much the same with a different stirring pot. We’re quite different. It’s something we’ve worked on for years to put together.”

Henry said the fund’s biggest difference was that it did not deal in interest-based products such as term deposits or other bank lending products.

It also has an ethical mandate not to invest in companies that produce pork, alcohol, tobacco or pornography. It avoids derivatives because of the Sharia prohibition on gambling.

The fund will pay purification payments to charities on any interest returns.

Investments must involve a shared risk, such as shares that would rise or fall with the company’s fortunes. It is currently invested in stocks such Apple, Facebook and Google. Henry said: “It’s a very back-to-basics investment style. We invest in companies that are making something that people want, real estate that is debt free and farming.”

He said there was a benefit to non-Muslim investors who wanted a KiwiSaver fund that did not use financial gearing. “It’s not at risk to the banks... it should appeal to anyone looking for an ethical fund that doesn’t get involved in money lending, people who want a fund that over a number of years will steadily grow.”

The main fund is targeting 10% to 14% growth in US dollar terms year-on-year.

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