SHARI’AH FUND GUIDE · 2020-03-01 · Darren is a CFA charter holder and holds a degree in Investment Management (University of Stellenbosch) and a BCom (Hons) in Financial Analysis

A reference guide to Shari’ah compliant investing and the range of Shari’ah compliant fund options on the Glacier platform. At 31 March 2019, the Shari’ah All Share had delivered a 1 year return of 16.68%, a three-year return of 7.5% and 0.86% over five years.

T H I N K W O R L D C L A S S

SHARI ’AH FUND GUIDEApril 2019 - Review of Quarter 1

SHARI ’AH BOOKLET BY GLACIER RESEARCH - Q1 - APRIL 2019 2

THE TEAM

A’ishah Kriel

A’ishah holds a Bachelor of Commerce Degree from the University of the Western Cape. She also holds a BCom (Hons) degree in Finance from the University of the Western Cape. She’s also a member of the Golden Key international Honour society. A’ishah joined Glacier in January 2019 as a research and investment intern.

Lesego Mogomotsi

Lesego holds a BCom degree in Investment Management as well as a Postgraduate Diploma in Financial Planning from the University of Stellenbosch. Lesego started her career at RisCura as an analyst in their data services team, before joining PPS as a performance analyst. Lesego joined the Glacier research team in January 2018.

Cindy Mathews-De Vries

Cindy holds a MSc (Cum Laude) degree in Computational Finance, a BSc (in Computer Science and Mathematics) and an Associate in Management (AIM) qualification. She has nine years’ financial services industry experience of which seven were spent as an equity analyst. She started her career as a software developer at Tellumat and later as a quantitative analyst at Futuregrowth Asset Management. Cindy joined Glacier as a discretionary fund manager in January 2017.

Liesl-Mari de Jager

Liesl-Mari holds a BA (Hons) degree in Industrial Psychology (Cum Laude) and an MBA (Cum Laude). She has 22 years’ financial services industry experience of which five years were spent as an equity analyst. Liesl-Mari joined Glacier in 2002 and was previously the head of Glacier Risk and Compliance, then head of the Glacier research team, before taking up the role as head of Discretionary Fund Management.

Darren Burns

Darren is a CFA charter holder and holds a degree in Investment Management (University of Stellenbosch) and a BCom (Hons) in Financial Analysis and Portfolio Management from the University of Cape Town. He has completed RE 1, 3 and 5 and has the relevant experience as a representative and key individual for both Category I and Category II licences. Darren joined Glacier from Secure Wealth, where he worked as a director, financial adviser and analyst for seven years. He joined Glacier as a discretionary fund manager in October 2016.

Luke McMahon

Luke holds a BCom (Accounting) degree and BCom (Hons) degree in Business Administration from the University of the Western Cape (UWC). He also holds a Master’s degree in Business Management from the University of the Western Cape. Luke joined the Glacier research team in January 2016.

Dean de Nysschen

Dean holds a BComm degree in Investment and Financial Management from the University of Stellenbosch. He joined Glacier in April 2018, prior to which he was responsible for equity research, analysis and manager research at a Cape Town based private wealth manager. Dean has passed Level I and II of the CFA program, and is currently a Level III candidate.

Patrick Mathabeni

Patrick holds a BCom (Finance) degree and BCom (Hons) degree in Business Management (Finance stream) from the University of South Africa. He started his career at Old Mutual, and later joined State Street Global Services. He joined the Glacier research team in January 2018.

Francis Marais

Francis is a CFA charterholder and holds a BCom (Hons) degree in Financial Analysis from the University of Stellenbosch. He started his career at Sanlam Employee Benefits as a fund accountant and later as a review manager. He then spent four years as the operations and research manager at Nostic Asset Management (Category II Discretionary FSP). Francis joined the Glacier research team in March 2015 as an analyst and was promoted to senior analyst in November 2016. He took on the role of head of Glacier Research in October 2018.

Saleh Jamodien

Saleh holds a Business Science degree in Finance from the University of Cape Town (UCT) and has passed the CFA Level I exam. He started his career at Allan Gray as a Client Service Consultant and joined the Glacier Research team in February 2019 as a Graduate Junior Research and Investment Analyst.

Imraan Khan

Imraan holds a BCom (Finance and Economics) degree and BCom (Hons) degree specialising in Finance and Investment, from the University of the Western Cape. He joined Glacier in 2011 as a client service consultant from a graduate programme at Santam. Imraan joined the Glacier research team in November 2016.

Sanusha Gopaul

Sanusha holds a BCom degree specialising in Risk Management from the University of South Africa (UNISA). She has 12 years’ experience in the financial services industry and joined Glacier in 2010 as a client service consultant. Sanusha joined the Glacier Discretionary Fund Management team in December 2015.

Leigh Köhler

Leigh joined Glacier in 2003 after completing his BCom undergraduate degree in Politics, Philosophy and Economics from the University of Cape Town. He later qualified with a BCom (Hons) in Economics from UNISA. Leigh completed his MBA (Cum Laude) through the University of Stellenbosch Business School (USB) in 2017. He was previously the head of the Investment Administration team at Glacier before taking up the role as head of Glacier Research in 2012. Leigh is now the Head of Investment Solutions at Glacier, a portfolio that includes Glacier Research, Glacier Consulting, Glacier Management Company and Glacier Invest.

Shawn Phillips

Shawn holds a BCom (Hons) degree in Financial Analysis and Portfolio Management from the University of Cape Town. He also holds a BSocSci degree in Philosophy, Politics and Economics from the University of Cape Town. He has passed Level I of the CFA programme. Shawn joined the Glacier research team in January 2016.


Shari’ah Investing

Shari’ah Guide Dash Board

Shari’ah-compliant Multi-Asset Fund Range 27four Shari’ah Balanced Fund of Funds 27four Shariah Income Prescient Element Islamic Balanced Fund Kagiso Islamic Balanced Fund Old Mutual Albaraka Balanced Fund Stanlib Multi-Manager Shari’ah Balanced Fund of Funds Sentio SCI HIKMA Shariah Balanced

Shari’ah-compliant Equity Fund Range 27four Shari’ah Active Equity Fund Element Islamic Equity Fund Kagiso Islamic Equity Fund Old Mutual Albaraka Equity Fund Sentio SCI Hikma Shariah General Equity

Shari’ah-compliant Global Equity Fund Range Element Islamic Global Equity Fund

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CONTENTS


SHARI’AH INVESTING

The term Shari’ah literally means “the path to a watering hole” and refers to the fundamental code that governs Islam. Shari’ah law encompasses both religion and state-law, as under the principle of Shari’ah there is no distinction between the two. There are two main sources of Shari’ah law – firstly the Qur’an (Islamic holy book) and the example set by the Prophet Muhammad (PBUH) i.e. the Sunna.

Shari’ah investing therefore means investing in accordance with Islamic law and adhering to the principles that govern it. Up until a few years ago the number of Shari’ah compliant funds was limited to one or two asset managers, but over the last few years there has been a rise in the number of asset managers offering Shari’ah funds.

The five main principles that govern Shari’ah investing

• Ban on Interest: According to Shari’ah law both parties need to take risk when profit is earned, therefore one cannot invest in conventional fixed interest instruments.

• Ban on uncertainty: In terms of Islamic principles the future outcome of an investment needs to be free of major uncertainty. Speculative financial instruments like options and other derivatives therefore may not be used.

• Ban on financing certain economic sectors that are deemed to be non-permissible such as non-halaal meat products, gambling companies, weapon production, etc.

• Profit and loss sharing principle: Both parties to the financial transaction must share in the risks and the rewards attached to it.

• Asset-backing principle: Each transaction needs to be backed by or linked to a tangible underlying asset.

All asset managers that offer Shari’ah compliant funds need to have a separate and independent Shari’ah Advisory board. The board normally comprises religious scholars and takes on an advisory role, primarily ensuring that all investments comply with Shari’ah law.

Equity

Due to the fact that there are certain prohibited companies or sectors when investing in equities, all managers will screen shares in a two-step process:

• Qualitative Screening: this looks at whether companies are involved in permissible (halaal) activities and investments. All companies whose primary business involves forbidden (non-halaal) activities and investments will be excluded. Non-permissible activity may not be greater than 5% of total revenue. Forbidden products will include conventional financial services like banking and insurance, alcohol and tobacco, pork-related or non-halaal food production, gambling, pornography, and weapons and arms manufacturing.

• Financial Ratio Screening: companies are screened using financial ratios to look at their liquidity, interest income and debt. The ratios are aimed at determining how much of the company’s balance sheet is invested in non-permissible activity and are set out by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) board. In order for a company to be Shari’ah compliant, the ratio of total debt to total assets has to be less than 30%; cash and interest-bearing assets need to be less than 30% of total assets and accounts receivable and cash need to be less than 70% of total assets.

Since it is possible to invest in businesses that have less than 5% of their earnings gained from non-permissible activity, it is important that all funds have a structured process in place to extrapolate the non-permissible income (NPI). This is known as “dividend-purification” as NPI is removed from dividends and normally distributed to charity.

Fixed Interest

Shari’ah funds are not allowed to invest in conventional fixed-interest and money market instruments. The fixed-interest type portion of Multi-Asset Shari’ah funds are therefore invested in instruments known as sukuk. Sukuk is an Arabic word which directly translates into “certificate of ownership”. There are various types of sukuk, but South African funds typically comprise primarily Murabaha sukuk. Murabaha sukuk, in simple terms, constitutes participation in the ownership of a company and represents ownership of an underlying asset. The instrument is backed by an underlying asset and involves a transaction where the cost and profit of the tangible asset is ascertained and disclosed upfront. Sukuk owners have the right to profits but will also be affected by losses. Maturity of sukuk will typically correspond to an underlying asset or project.



Differences in traditional funds and Shari’ah funds

Factor Conventional Shari’ah Difference

Fixed Income Bonds, Money Market, Other fixed interest instruments Sukuk Returns are less volatile. In SA this is limited to short-dated

duration and no exchange.

Equity Exposure All sectors Filtered sectorsSA Shari’ah funds will normally be overweight in resources and have no financials exposure. Offshore Shari’ah funds may have a wider universe.

Shari’ah Board n/a Islamic Scholars Add compliance oversight

Fund Audit n/a Quarterly Increased level of governance.

After conducting an extensive due diligence on the asset managers that offer Shari’ah funds in South Africa we have identified six managers that we believe follow a sound process and philosophy in terms of their portfolio management, and who also have the correct structures and methodology in place to offer Shari’ah compliant funds.

27four Investment Managers

• 27four Shari’ah Income Fund of Funds (Regulation 28 compliant)• 27four Shari’ah Balanced Fund of Funds (Regulation 28 compliant)• 27four Shari’ah Active Equity Fund

27four is a multi-manager that offers the 27four Shari’ah Balanced Fund of Funds, Active Equity Fund and has recently launched a multi-asset income fund.

Shari’ah Compliant Equity Fund is managed by Visio Capital and the income fund is managed by in-house portfolio managers. 27four has been managing their Shari’ah balanced fund for institutional clients for a number of years.

27four Shari’ah Supervisory Board

The supervisory board comprises three highly-respected Islamic scholars with significant experience in Shari’ah Law:• Mufti Ahmed Suliman (Chairman)• Mufti Mohammed Ashraf• Mufti Zaid Haspatel

The board plays an ongoing supervisory role for monitoring ongoing Shari’ah compliance with respect to their investment offering, investment process implementation, mandates and legal documentation. All Shari’ah products are developed in consultation with and approved by the board. The ongoing process of product development, fund segregation and Shari’ah reviews ensures that the Shari’ah products are free of interest and within the guidelines prescribed by Shari’ah. A semi-annual audit is completed by the board to verify Shari’ah compliance which is then certified through the issuance of a Shari’ah compliance certificate.

Kagiso Asset Management

• Kagiso Islamic Equity Fund• Kagiso Islamic Balanced Fund (Regulation 28 compliant)

Kagiso has been managing Shari’ah investments since 2009 when they launched the Kagiso Islamic Equity Fund. In May 2011, they also launched the Regulation 28 compliant Islamic Balanced Fund. In addition to aiming for consistent superior returns based on their philosophy and process, they aim to deliver a high level of integrity in their Shari’ah offering.

Kagiso Shari’ah Supervisory Board

Their supervisory board comprises three highly-respected Islamic scholars with significant experience in Shari’ah Law:

• Sheigh Mohammad Taha Karaan is the founder and principal of Dar al-‘Ulum al-‘Arabiyyah al-Islamiyyah, which is based in the Strand, Western Cape. He is also a longstanding member of the Fatwa Committee of the Muslim Judicial Council in Cape Town.

• Mufti Zubair Bayat is the director of DIRECT (Darul-Ihsan Research and Education Centre) and it is in this capacity that he serves as an adviser to numerous Islamic bodies.

• Mufti Ahmed Suliman serves as a Shari’ah adviser and board member to a number of financial and investment companies.



Kagiso Islamic Funds have their own Shari’ah Advisory and Supervisory board, which is chaired by Sheigh Mohammad Taha Karaan, principal of Dar al-‘Ulum al-‘Arabiyyah al-Islamiyyah. Their Shari’ah advisers meet with the portfolio manager regularly to review each of the holdings in their Shari’ah funds. In addition to industry screens, they conduct qualitative screens to ensure that the companies’ business activities are Shari’ah compliant. These screens are interrogated by their Shari’ah advisers on a continuous basis.

Element Investment Managers

• Element Islamic Equity Fund• Element Islamic Balanced Fund (Regulation 28 compliant)• Element Islamic Global Equity Fund

Element Investment Managers’ Shari’ah offering is founded on a structured process. Before launching their own Shari’ah fund they managed Old Mutual’s Shari’ah offering before it was taken in-house, and they also managed the Symmetry Shari’ah Balanced Fund from 2005 to 2010. During October 2012, Element launched a retail Shari’ah Global Equity General Fund, the Element Islamic Global Equity Fund. In addition to having an independent Shari’ah Advisory Board, the manager has an internal Shari’ah department.

Element Shari’ah Supervisory Board

Their supervisory board comprises four highly-respected Islamic scholars with significant experience in Shari’ah Law:

The board has been together for the last 10 years.

• Mufti Mohammed Ali (Chairman) – Senior Lecturer and Mufti at Darul Uloom Zakariyya • Mufti Ashraf Qureshi – Member of Board of Muftis of SA, Mufti at Darul Uloom Springs• Mufti Ahmed Suliman – Shari’ah Advisor, Aalim & Ifta’ at Darul Uloom Zakariyya• Mufti Yusuf Suliman – CSAA (Certified Islamic Professional Accountant), Compiled BANKSETA Islamic

banking learning material that is used by banks locally and abroad

The first step towards Shari’ah compliance is the appointment of an independent Shari’ah supervisory board by either the fund’s sponsor or the fund manager. This board is an independent body of specialised jurists in fiqh almua’malat or Islamic jurisprudence. The role of the board is to ensure that the fund is compliant with the letter and spirit of Islamic investing.

Old Mutual Asset Managers

• Old Mutual Albaraka Equity Fund• Old Mutual Albaraka Balanced Fund (Regulation 28 compliant)

The Old Mutual Shari’ah funds are managed by Old Mutual’s Quantitative Investment boutique. The equity fund was established 20 years ago and broke new ground in Shari’ah investing in South Africa. A core differentiator in these funds is that they follow a purely quantitative active investment process.


• Dr Abdus Sattar Abu Ghudda (Syrian): Dr Ghudda is the senior Shari’ah consultant for Al Baraka Banking Group. He is also a director of the Department of Financial Instruments at Al Baraka Investment and Development Company and is a member of the Shari’ah supervisory boards of several Islamic financial institutions. Dr Ghudda obtained BA degrees in Islamic Shari’ah and in Law from Damascus University. He went on to earn his MA degree in Shari’ah and hadith and his PhD in Shari’ah and comparative fiqh from Al-Azhar University in Cairo.

• Shaykh Mahomed Shoaib Omar: Shaykh Mahomed Shoaib Omar serves as a member of the Shari’ah supervisory board of Al Baraka Bank. He completed his BCom Law degree and LLB at the University of KwaZulu-Natal. He studied Arabic and Islamic Law personally under the renowned contemporary jurist, Mufti Taqi Usmani, at Darul Uloom Karachi and has received Ijaazah from him.

• Mufti Shafique Ahmed Jakhura: Mufti Jakhura serves in the Fatwa Department preparing and issuing Islamic juristic rulings at the Darul Ihsan Research Centre in Durban. He has established and heads the Centre for Islamic Economics and Finance SA (CIEFSA) - a non-profit organisation dedicated to increasing awareness and providing education in the fields of Islamic economics and finance, structuring Shari’ah-compliant transactions and providing Shari’ah-compliant commercial solutions at various levels. In 2002, he completed, with distinction, the Aalimiyah Course at Madrasah Taleemuddeen, in Durban and in 2005, completed a three-year specialisation course in Islamic Jurisprudence (Fiqh and Fatwa) from Jamia Darul Uloom Karachi, under the guidance of Mufti Taqi Usmani, which culminated in the submission of a thesis on the topic of Shirkat and Mudharabat. He is a certified Shari’ah accountant and auditor from the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Bahrain. He has an Advanced Diploma in Islamic Banking and Finance from the Centre for Islamic Economics, based in Karachi. He also serves the Islamic Finance and Takaful industry in other parts of the world.



The Shari’ah supervisory board ensures that the investable universe is compliant with Shari’ah. The board comprises internationally recognised scholars in line with the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which reflects global best practice. The board is independent of the fund manager. This ensures that the selection of the investment universe cannot be manipulated for the benefit of performance, at the expense of Shari’ah compliance. Al Baraka Bank’s internal audit department is also responsible for monitoring the funds during the year, to ensure that at all times they comply with the fatwas and other directives issued by the board. The depth of knowledge and expertise of the board members ensure peace of mind for investors.

Sentio Capital Management

• Sentio SCI HIKMA Shari’ah Balanced Fund• Sentio SCI HIKMA Shari’ah General Equity Fund

Sentio Capital Management offers a product and services suite that is guided by the wisdom of investing along the philosophical tenets of Islam and bring the innovation of their process into their products. Their investment philosophy encompasses both wisdom of the Divine and by definition, the simple logic of investing ethically and profitably. Sentio has a Shari’ah investment offering that is flexible and can be tailored to each client’s unique requirements. They believe that the concept of robust investment approach and Shari’ah compliance are not mutually exclusive and that Islamic tenets of investing would be acceptable to anyone who believes in a fair, sustainable and mutually profitable product.

Sentio Shari’ah Supervisory Board


• Qari Ayoob Ishaq (Chairman) - Lecturer and head of faculty at Darul Uloom Zakariayya. - Expert on Fiqhul Mua’malaat, Qiraat and Tajweed.• Mufti Ahmed Suliman - Ex member of Fatwa Dept and Judicial Committee of Jamiatul Ulema KZN. - Shari’ah board member of FNB, Standard Bank Africa, Takafol SA, Element, Kagiso, amongst others.• Mufti Zaid Haspatel - Shari’ah board member FNB. - Degree in Higher Islamic Education, Aalim Faadhil (Distinction), lecturer at Darul Uloom Zakariayya.

The Sentio Shari’ah supervisory board ensures that the investable universe is compliant with Shari’ah. The board comprises internationally recognised scholars in line with the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which reflects global best practice. The board is independent of the fund manager. This ensures that the selection of the investment universe cannot be manipulated for the benefit of performance, at the expense of Shari’ah compliance.

STANLIB Multi-Manager Shari’ah Balanced Fund of Funds

STANLIB Asset Management

• STANLIB Multi-Manager Shari’ah Balanced Fund of Funds

The STANLIB Shari’ah Equity Fund was launched in September 2007. The fund is managed with the intention to maximise long-term capital returns while reducing downside risk and remaining Shari’ah compliant at all times. STANLIB’s head of research, Henry Munzara and Suhail Mohamed (who is also responsible for internal Shari’ah compliance) co-manage the fund. The team launched a multi-manager balanced fund of funds in March 2015 which invests in other collective investment schemes and follows an outsourced approach. The STANLIB Multi-Manager Shari’ah Balanced Fund of Funds aims to outperform the average return of investable peers i.e. the Shari’ah Balanced (Multi Asset High Equity) peer average, at risk levels consistent with those of these peers. They do this by blending skillful managers to create a natural balance within a portfolio relative to its stated objective.

STANLIB Shari’ah Supervisory Board


• Professor Hashim Kamali Chairman: Shari’ah Board - PhD (London) Islamic Jurisprudence, BA (Afghanistan) - Professor of Islamic Jurisprudence (International Islamic University of Malaysia) - Shari’ah adviser to CIMB Islamic Bank and Malaysian Securities Commission• Sheikh Faizal Manjoo - MA Islamic Management Banking and Finance (UK); LLB (SA) - Lecturer in Islamic Jurisprudence (Markfield Institute of Higher Learning)


- Member Shari’ah Board – Corporate Solutions Bhd (Malaysia), Hanover Re.• Mufti Ahmed Suliman - IFTA – Darul Uloom Zakariya - Member Shari’ah Board – Element, Kagiso, Sanlam, Standard Bank Africa, First Rand, Takafol SA

The Fund has two layers of Shari’ah compliance:• The internal compliance measures of the underlying managers• STANLIB’s Shari’ah supervisory board

Cash held by either STANLIB Multi-Manager or the underlying managers of the Fund, will be held in Islamic banking or non-interest bearing accounts. Any non-permissible income earned by investee companies will be removed from the fund on regular basis and distributed to charities vetted and approved by our Shari’ah Board. To ensure continuous compliance with Shari’ah principles, we receive guidance from our independent Shari’ah supervisory board, consisting of both local and international Shari’ah scholars. This board meets bi-annually to analyse and audit the STANLIB Shari’ah portfolios.



SHARI’AH GUIDE DASH BOARD

Fund Manager Category Benchmark Fee Equity Sukuk/ Property

Offshore

27Four Shari’ah Balanced FoF

27four invest-ment managers

SA Multi-Asset High Equity

SA- Multi Asset High Equity Category Average

1.84% 40% - 65% 0% - 60% Max 25%

Element Islamic Balanced

Shamier Khan SA Multi-Asset High Equity

Average of Shari’ah General Balanced Funds with a 1 - year track record

2.4% 30% - 75% 0%-25% Max 25%

Kagiso Islamic Balanced

Abdul Davids SA Multi-Asset High Equity

South African - Multi Asset - High Equity funds average

1.48% 55%*** 20%*** Max 25%***

Old Mutual Albaraka Balanced

Saliegh Salaam, Grant Watson & Warren McLeod

SA Multi-Asset Medium Equity

45% Customised SA Shari’ah Equity Index, 10% S&P Developed Markets Large and Mid-Cap Shari’ah Index, 40% STeFI Composite – 0.5% & 5% Three-month US Dollar LIBOR

1.43% 45% - 60% 35% -45%** Max 25%

Sentio SCI Hikmah Shariah Balanced

Mohamed Mayet; Rayhaan Joosub; Imtiaz Sulaiman; Olwethu Notse


Averaged SA Multi-Asset High Equity

1.76% 60%-75% 0%-25%/ Property 10%, Cash 5%

Max 25%

STANLIB Multi-Manager Shariah Balanced

Naweed Hoosenmia, Suhail Mohamed


FTSE/JSE Shari’ah ALSI 45% STeFi Composite less 0.5% p.a. 35% Dow Jones Islamic World Index (ZAR) 15% Three-month USD LIBOR (ZAR) 5%

1.15% 45%-60% 20%-45% Max 25%

Fund Manager Category Benchmark Fee Equity Sukuk/ Property

Offshore

27 Four Shariah Income Prescient

Nadir Thokan and Claire Rentzke

SA Multi-Asset Income

110% Stefi & volitility < 4% p.a 1.40% Max 10% 0%-100%, Property Max 10%

Max 20%

Fund Manager Category Benchmark Fee Equity Offshore

Element Islamic Equity

Shamier Khan SA Equity General

Average of Shari’ah General Equity Funds with a 1- year track record

2.39% 0%-100% 0%-25%

Kagiso Islamic Equity

Abdul Davids SA Equity General

South African - Equity - General funds average

1.41% 0%-100% 0%-25%

Old Mutual Albaraka Equity

Saliegh Salaam, Grant Watson & Warren McLeod

SA Equity General

85% Customised SA Shari’ah Equity Index & 15% S&P Developed Markets Large and Mid-Cap Shari’ah Index

1.71% 0%-100% 0%-25%

Sentio SCI Hikma Shariah Equity

Mohamed Mayet; Ray-haan Joosub; Imtiaz Su-laiman; Olwethu Notse

SA Equity General

Averaged SA General Equity 2.35% 0%-100% 0%-25%

27Four Shariah Active Equity

Visio Capital SA Equity General

Average of the South African Equity General Category

2.23% 0%-100% 0%-25%

Balanced Funds

Equity

Income Funds

*equity & property**cash & equity conduit***proposed allocations


SHARI’AH-COMPLIANT MULTI ASSET FUND RANGE

Shari'ah-Compliant Multi Asset fund range

Funds:27four Shari'ah Balanced Prescient FoF27four Shariah Income PrescientElement Islamic Balanced SCI FundKagiso Islamic Balanced FundOld Mutual Albaraka Balanced FundSTANLIB MM Shari'ah Balanced FoFSentio SCI HIKMA Shariah Balanced

Risk-Reward: 3 Years Annualised

Time Period: 01/04/2016 to 31/03/2019

Std Dev

0.0 3.0 6.0 9.0 12.0 15.0 18.0-4.0

-1.0

2.0

5.0

8.0

11.0

14.0

27four Shari'ah Balan. Prescient FoF A1 Element Islamic Balanced SCI A Kagiso Islamic Balanced A

Old Mutual Albaraka Balanced A STANLIB MM Shari'ah Balanced FoF B4 Sentio SCI HIKMA Shariah Balanced B2

27four Shari'ah Income Prescient B3

Ret

urn

Quartile Ranking

As of Date: 31/03/2019

Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile

-15.0-10.0-5.00.05.0

YTD 1 year 3 years

10.015.020.0



27four Shari'ah Income Prescient B3

Ret

urn

Returns

As of Date: 31/03/2019YTD 1 year 3 years

27four Shari'ah Balan. Prescient FoF A1Element Islamic Balanced SCI AKagiso Islamic Balanced AOld Mutual Albaraka Balanced ASTANLIB MM Shari'ah Balanced FoF B4Sentio SCI HIKMA Shariah Balanced B227four Shari'ah Income Prescient B3(ASISA) South African MA High Equity

4.42 6.45 3.794.62 10.19 9.39

4.80 7.65

4.78 8.05 6.675.17 5.59 3.674.79 6.69 5.21

2.41 9.185.79 5.76 3.79

Risk StatisticsTime Period: Since Common Inception (01/04/2017) to 31/03/2019

Std DevMax

Drawdown(monthly)

UpPeriod

Percent

DownPeriod

PercentSharpe

Ratio27four Shari'ah Balan. Prescient FoF A1Element Islamic Balanced SCI AKagiso Islamic Balanced AOld Mutual Albaraka Balanced ASTANLIB MM Shari'ah Balanced FoF B4Sentio SCI HIKMA Shariah Balanced B227four Shari'ah Income Prescient B3(ASISA) South African MA High Equity

7.17 -6.20 54.17 45.83 -0.486.56 -5.51 62.50 37.50 -0.026.75 -6.06 58.33 41.67 -0.236.77 -7.06 54.17 45.83 -0.46

6.68 -5.46 54.17 45.83 -0.536.60 -6.70 54.17 45.83 -0.34

3.64 -3.78 66.67 33.33 -0.357.51 -7.53 62.50 37.50 -0.37

Maximum Drawdown: Monthly

Time Period: Since Common Inception (01/04/2017) to 31/03/2019

2017 2018 2019-8.0

-6.0

-4.0

-2.0

0.0



27four Shari'ah Income Prescient B3 (ASISA) South African MA High Equity

Rolling 3 Year Returns

Time Period: 01/04/2016 to 31/03/2019

Rolling Window: 1 Year 1 Month shift

04 05 06 07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-7.5

0.0

7.5

15.0

22.5

27four Shari'ah Balan. Prescient FoF A1 Element Islamic Balanced SCI A Kagiso Islamic Balanced AOld Mutual Albaraka Balanced A STANLIB MM Shari'ah Balanced FoF B4 Sentio SCI HIKMA Shariah Balanced B227four Shari'ah Income Prescient B3 (ASISA) South African MA High Equity

Ret

urn

SHARI ’AH BOOKLET BY GLACIER RESEARCH - Q1 - APRIL 2019 1 1

27FOUR SHARI’AH BALANCED FOF

27four Shari'ah Balanced FoF

Drawdown - DailyTime Period: Since Common Inception (01/06/2011) to 31/03/2019

2011 2013 2015 2017 2019-8.0

-6.0

-4.0

-2.0

0.0

27four Shari'ah Balan. Prescient FoF A1 (ASISA) South African MA High Equity

27four Shari'ah Balanced Prescient FoF - RiskTime Period: 01/10/2018 to 31/03/2019

Inv BmkReturnStd DevMax DrawdownTracking ErrorAlphaBetaSharpe Ratio

1.037.77

-4.990.000.001.00

-0.61

0.127.22

-4.553.16

-2.560.85

-0.91

27four Shari'ah Balanced Prescient FoF - Asset AllocationPortfolio Date: 31/12/2018

%Stock 60.7Bond 3.3Cash 35.6Other 0.5Total 100.0

27four Shari'ah Balanced Prescient FoF - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

0.00 2.91 1.460.77 -2.56 -0.78 2.99 -0.53 1.92 -0.81 4.46 -1.73 -1.89 -2.71 0.461.72 -0.95 1.43 0.50 -0.75 -0.95 3.23 1.18 0.84 3.73 -1.24 -2.37

-2.15 1.10 1.20 1.69 1.06 -2.37 1.42 1.48 -0.75 -2.10 1.34 -0.320.74 3.07 -0.65 2.16 -0.34 -1.29 2.47 -0.49 -1.38 3.51 0.47 1.05

-0.17 1.80 1.10 1.28 1.05 1.50 1.26 0.05 -0.20 -1.20 -0.03 0.83

-0.686.371.479.567.46

5.23

Portfolio Manager: 27four Investment ManagersFund Category: SA Multi Asset High EquityBenchmark: SA Multi Asset High Equity averageLaunch Date: May 2011Fund Size: R 224 millionTIC: 1.84%

Objective: To diversify across asset classes for long term capital growth through a balanced approach. The manager in selecting collective investment schemes for the portfolio will seek to follow an investment policy which will secure for investors a combination of investments in equity, bond (sukuks), money and property markets. All collective investment schemes and assets will have been approved by the Shari’ah Supervisory Board for time to time. The portfolio will predominately invest in South African markets, but is however permitted to include investments in offshore jurisdictions subject to the investment conditions determined by the Registrar from time to time. The portfolio will be subject to the Prudential Investment Guidelines for South African Retirement Funds, being Regulation 28 of the Pension Funds Act, or such other Legislation published from time to time.

27Four Investment Managers has been successfully managing a suite of multi-manager Shari’ah compliant balanced investment portfolios for institutional clients for a number of years and in May 2011 launched a retail version of the fund. They have also recently launched a Shari’ah Equity Fund in partnership with Visio Capital. 27Four has a profound understanding of investments within the Shari’ah spectrum both within South Africa and abroad. This expertise together with their focus of choosing the best underlying asset managers means that they endeavour to create a robust and sound balanced fund. They believe that asset allocation is the main driver of long term outperformance and this is the first step in the multi-manager process. When evaluating asset managers for their Shari’ah Balanced Fund they look at 3 key factors – process and philosophy, operations and also whether the manager complies with Shari’ah Law. The next step is to construct the portfolio – for the Shari’ah Balanced fund this means finding an optimal balance and diversification between asset class, investment style, asset manager – and making sure that they keep within the risk budget. The Shari’ah Balanced fund complies with Regulation 28 and is therefore appropriate for retirement money. Even though it is not mandatory for a multi-manager, they have an independent Shar’iah Supervisory Board. The equity portion of this fund is invested with underlying asset managers and the offshore component invested with a foreign multi-manager. The fixed interest portion is invested in sukuk. In contrast to single asset managers this fund offers you the diversification benefits not only through the different asset classes, but also additional diversification through different asset managers.

Investment Growth - DailyTime Period: Since Common Inception (10/05/2011) to 31/03/2019

2011 2012 2013 2014 2015 2016 2017 201880.0

100.0

120.0

140.0

160.0

180.0

200.0

27four Shari'ah Balan. Prescient FoF A1 169.4 (ASISA) South African MA High Equity 192.3

Source: Morningstar Direct


27FOUR SHARIAH INCOME PRESCIENT

27four Shari'ah Income FoF


2017 2018 2019-4.0

-3.0

-2.0

-1.0

0.0

27four Shari'ah Income Prescient B3 STeFI Composite ZAR

27four Shari'ah Income Prescient - RiskTime Period: 01/10/2018 to 31/03/2019


3.590.08

3.563.65

-1.20

0.00

27four Shari'ah Income Prescient - Asset AllocationPortfolio Date: 31/12/2018


27four Shari'ah Income Prescient - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

-0.19 1.28 1.32-1.34 -1.11 0.56 1.44 0.21 1.69 -0.11 2.60 -0.48 1.03 -1.20 1.31

0.47 0.53 0.77 0.99 0.90 0.90 1.80 -0.17 -1.214.592.21

Portfolio Manager: Nadir Thokan and Claire RentzeFund Category: SA Multi-Asset IncomeBenchmark: 110% of STeFI, net of feesLaunch Date: March 2017Fund Size: R 80 millionTIC: 1.13%

Objective: The fund is a Shari’ah compliant, specialist fund of funds portfolio focusing on income generating assets. It aims to provide relative capital stability and optimal income returns and is Regulation 28 compliant. The fund is designed to provide investors with enhanced cash like returns and is suitable for Shari’ah compliant investors looking for a low risk product. In order to achieve its investment objectives, the fund will utilise a combination of unit trust funds investing and direct investments in fixed income securities, listed property and other income generating securities that are Shari’ah compliant in both South Africa and internationally, which have a fixed maturity date and either have a predetermined cash flow profile or are linked to benchmark yields.

27Four Investment Managers has been successfully managing a suite of multi-manager Shari’ah compliant portfolios for institutional and retail clients for a number of years which includes a Shariah balanced and general equity fund. They have launched a Shariah income fund which is a low risk portfolio having minimal equity exposure or no equity exposure, resulting in far less volatility than more aggressively mandated portfolios and in turn the probability of capital loss (permanent/temporary) is less likely. However, expected potential long term investment returns could be lower over the medium to long term. 27Four has a profoundunderstanding of investments within the Shari’ah spectrum both within South Africa and abroad. This expertise together with their focus on selecting the best underlying asset managers means that they endeavour to create a robust and sound income fund. They believe that asset allocation is the main driver of long term outperformance and this is the first step in the multi-manager process. When evaluating asset managers for their Shari’ah Income Fund they look at 3 key factors –process and philosophy, operations and also whether the manager complies with Shari’ah Law. The next step is to construct the portfolio – for the Shari’ah Income fund this means finding an optimal balance and diversification between asset class, investment style, asset manager – and making sure that they keep within the risk budget.


06/2017 09/2017 12/2017 03/2018 06/2018 09/2018 12/2018 03/201997.5

100.0

102.5

105.0

107.5

110.0

112.5

115.0

117.5

27four Shari'ah Income Prescient B3 112.7 STeFI Composite ZAR 115.4



ELEMENT ISLAMIC BALANCED FUND

Element Islamic Balanced

DrawdownTime Period: Since Common Inception (01/05/2010) to 31/03/2019

2014 2019-12.5-10.0-7.5-5.0-2.50.0

Element Islamic Balanced SCI A (ASISA) South African MA High Equity

Element Islamic Balanced SCI - RiskTime Period: 01/10/2018 to 31/03/2019


1.037.77

-4.990.000.001.00

-0.61

4.526.58

-2.434.745.200.670.30

Element Islamic Balanced SCI - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

20192018201720162015

0.43 3.34 0.80-0.04 -3.21 0.24 2.56 -1.27 1.28 -0.72 4.15 -0.59 -0.61 -1.83 2.401.76 0.31 1.11 0.24 0.19 0.07 3.19 2.52 0.20 3.44 -0.87 -1.48

-0.34 4.88 0.32 2.42 0.78 -0.85 4.36 0.41 -0.62 -3.67 2.72 4.550.18 1.23 -3.11 1.90 -0.85 -3.21 -1.54 -0.78 -2.49 4.97 -3.58 2.04

2.1511.0915.60-5.48

3.97

Element Islamic Balanced SCI - Asset AllocationPortfolio Date: 31/03/2019


Portfolio Manager: Shamier KhanFund Category: SA Multi Asset High EquityBenchmark: SA Multi Asset High Equity AverageLaunch Date: April 2010Fund Size: R 69 millionTIC: 2.12%

Objective: of the Element Islamic Balanced Fund will be to preserve capital with a reasonable level of income that is healing (permissible) for investors. The manager aims to do this by investing in an actively managed balanced portfolio, with an equity exposure (including international equity) between 0% and 75% at all times. The portfolio will be subject to the Prudential Guidelines for South African retirement funds being Regulation 28 of the Pension Fund Act or such other legislation published from time to time. The investment policy will focus on achieving this by investing in a wide variety ofasset classes such as equity securities, non-equity securities, listed property, money market instruments and assets in liquid form, both domestically and internationally, that have been approved for investment by the Shari'ah Supervisory Board (SSB) from time to time.

Element has a long history and experience in the management of Shari’ah funds starting from 2000 when they managed the Old Mutual’s Islamic equity offering until the fund was taken in-house in 2005.They also managed the Symmetry Shar’iah Balanced fund from 2005 until 2010. Both the Shari’ah Equity and Balanced funds are managed in accordance to Element’s contrarian process and philosophy but with a Shari’ah overlay. The Element equity process is fundamentally a bottom up one that seeks to identify gaps between share price and intrinsic value. There are three key factors which they focus on during their management process. Firstly they look at value with the aim to identify stocks that will deliver a superior long term return; secondly, how much exposure they would like have to the stock in the portfolio; lastly they will also take into account the well-being of stakeholders. In addition to this Element also takes into account environmental, social and governance (ESG) principles when they evaluate shares. The social responsible component that filters through to the management of all their funds sets them apart from many peers within the retail space. The Shari’ah process comprises of qualitative screening to look at the nature of the business followed by financial screening to ensure that the business complies with limitations set out by the AAOIFI board. Element have been full AAOIFI members since 2007. The Non-Permissible Income (NPI) portion the fund is extracted on the receipt of dividends and does not enter the fund. The asset allocation process is a combination of top-down and bottom analysis; however the significance of each analysis will be dependent on the sector and share. A key differentiator of this fund relative to the other Shari'ah asset allocation funds is that they have exposure to property. The fixed interest portion is done via sukuk. The asset allocation split of the Shari’ah Balanced fund will be similar to the traditional Element Balanced fund. The foreign exposure in the fund is obtained through the Element Islamic Equity fund (limited to 20%) while the remaining foreign exposure is through foreign sukuk. In their foreign process Element has partnered with Credit Suisse Holt and Ideal Rating to screen global companies to identify attractive Shari’ah compliant stocks. The fund comprises of the top 50 stocks based on the screening and Element’s fundamental preferences.

Investment GrowthTime Period: Since Common Inception (29/04/2010) to 31/03/2019

2010 2011 2012 2013 2014 2015 2016 2017 201880.0

100.0

120.0

140.0

160.0

180.0

200.0

220.0

Element Islamic Balanced SCI A 166.3 (ASISA) South African MA High Equity 207.4



KAGISO ISLAMIC BALANCED FUND

Kagiso Islamic Balanced


2011 2013 2015 2017 2019-8.0

-6.0

-4.0

-2.0

0.0

Kagiso Islamic Balanced A (ASISA) South African MA High Equity

Kagiso Islamic Balanced - RiskTime Period: 01/10/2018 to 31/03/2019


1.037.77

-4.990.000.001.00

-0.61

0.837.04

-4.541.82

-1.000.88

-0.74

Kagiso Islamic Balanced - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

0.65 2.70 1.371.00 -1.33 -1.95 3.05 -0.43 1.89 0.57 3.57 -1.60 -2.41 -2.18 0.811.92 -0.54 1.56 1.26 -1.36 -0.57 2.64 1.22 1.83 4.03 -1.09 -1.99

-3.01 4.57 3.28 2.12 1.85 -2.49 2.36 2.12 -1.15 -2.05 1.90 0.73-1.56 3.22 -2.60 3.34 -1.08 -2.22 -0.86 -1.38 -2.00 4.51 -1.69 0.172.22 0.80 0.89 1.73 0.78 1.34 1.31 0.48 -1.47 -2.30 1.11 0.57

0.779.08

10.38-2.457.63

6.11

Kagiso Islamic Balanced - Asset AllocationPortfolio Date: 31/12/2018


Portfolio Manager: Abdulazeez DavidsFund Category: SA Multi Asset High EquityBenchmark: SA Multi Asset High Equity AverageLaunch Date: 03 May 2011Fund Size: R 1.1 BillionTIC: 1.63%

Objective: To provide steady long term returns and capital growth over the long term and a total portfolio return that is better than the average domestic – asset allocation – prudential – variable equity funds category. The portfolio has a moderate level of risk and therefore seeks to provide a moderated exposure to volatility over the short term. The Portfolio may invest in a wide variety of asset classes such as listed shares, sukuks, and listed property, both domestically and internationally subject to Shari’ah compliance. The portfolio may invest offshore to the maximum extent permitted by the Association for Savings and Investments South Africa (ASISA) domestic funds category. The portfolio may include participatory interests or any other form of participation in portfolios of collective investment schemes or other similar schemes only where the scheme has been approved in South Africa.The portfolio is Regulation 28 compliant.

Kagiso has been managing Shari’ah investments since 2009 with the launched the Kagiso Islamic Equity fund. In May 2011 they also launched a regulation 28 compliant Islamic Balanced fund. Kagiso’s house process and philosophy is applied to both funds, with an added Shari’ah compliance overlay. The valuation process is built on a combination of original, in-depth fundamental analysis and a multi-factor quantitative screening process. After an initial screening, approximately 100 shares are assessed. The first assessment summarizes the investment case, provides an estimation of cash-flows and an estimated valuation. The initial 100 shares are then reduced to about 66 which then undergo rigorous fundamental analysis which includes a meeting with management and an analysis of the company’s annual report. These reports also remain cognisant of current news-flow and ultimately look to produce investment ideas which will reflect in the equity portfolios. On the foreign equity side the process includes equity screening using Bloomberg and less detailed fundamental analysis. The results of fundamental analysis are then assessed along with a multi-factor screening tool which gauges the attractiveness of a share based on pre-determined factors. A ranking table is then generated. Over and above the Kagiso process there are additional filters implemented, namely: an industry screen, financial screens and additional screening for companies highlighted for inclusion. The industry screen removes stocks that would be deemed non-compliant accordance to Shari’ah law. The financial screens would ensure that those counters that passed through the industry screening also meet a series of financial criteria. Lastly the additional screening is simply an extra check to ensure that shares selected do indeed meet Shari’ah criteria. The asset allocation of the Islamic balanced fund will typically mirror that of the normal Kagiso Balanced Fund as the process and view taken will be the similar. The Balanced fund holds a combination of local and foreign equity and sukuk (Islamic bonds) and has a proposed strategic asset allocation of 55% to local equities, 20% local sukuk, 20% foreign equity and 5% foreign cash and sukuk. The funds are monitored by an internal Shari’ah advisory board.Non-permissible income is extrapolated in a seamless process as soon as dividends enter their accounts and are distributed to charities.

Investment Growth - DailyTime Period: 05/05/2011 to 31/03/2019

2011 2012 2013 2014 2015 2016 2017 201880.0

100.0

120.0

140.0

160.0

180.0

200.0

Kagiso Islamic Balanced A 169.5 (ASISA) South African MA High Equity 191.3



OLD MUTUAL ALBARAKA BALANCED FUND

Old Mutual Albaraka Balanced Insert Image


2014 2019-8.0

-6.0

-4.0

-2.0

0.0

Old Mutual Albaraka Balanced A (ASISA) South African MA Medium Equity

Old Mutual Albaraka Balanced - Risk

Time Period: 01/10/2018 to 31/03/2019Inv Bmk

ReturnStd DevDownside DeviationAlphaBetaR2Sharpe Ratio (arith)Tracking Error

0.338.873.04-1.241.02

79.46-0.754.03

1.356.720.46

-0.080.87

99.96-0.68

1.06

Old Mutual Albaraka Balanced - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

0.33 3.54 1.240.30 -1.06 -1.04 2.44 -1.08 1.18 -0.41 4.76 -1.61 -1.82 -3.79 0.991.83 -0.36 0.95 0.15 -1.04 -0.63 2.59 1.64 0.28 3.14 -0.89 -0.46

-1.89 5.04 0.28 -0.07 2.41 -1.62 1.19 0.77 -1.61 -2.45 1.28 0.302.16 2.46 -0.50 0.94 -1.22 -0.51 1.04 -0.42 -0.56 5.14 -1.28 2.000.56 1.32 0.59 1.16 0.41 1.22 0.34 -0.50 0.89 -0.18 0.50 1.13

-1.407.333.459.457.69

5.96

Old Mutual Albaraka Balanced - Asset AllocationPortfolio Date: 31/12/2018


Portfolio Manager: Saliegh Salaam, Grant Watson & Warren McleodFund Category: SA Multi Asset Medium EquityBenchmark: Composite of 45% SA Shari'ah Equity Index,10% S&P Developed Markets Large & Mid Cap Shari'ah Index, 40% SteFi - 0.5% & 5% 3 month US LiborLaunch Date: 12 November 2010Fund Size: R 2.3 BillionTIC: 1.64%

Objective: To seek steady long term capital growth with a moderate level of income to the investor, through a diversified asset class exposure of Equity and Non-Equity securities. Investments will consist of equities listed on South African as well as other exchanges, assets in liquid form, non-equity securities and participatory interests in other portfolios of schemes registered in the RSA or of participatory or of any other form of participation in portfolios of collective investment scheme in securities of other similar schemes permitted by the Shari’ah Standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The Investments of the portfolio will comply with Prudential Investment Guidelines as contained in the Pension Fund Act. The Manager may invest in financial instruments in accordance with the manner, limits and conditions as determined by CISCA and the Shari’ah Standards of the AAOIFI. Theportfolio is Regulation 28 compliant.

Old Mutual’s Quantitative Investments boutique has been involved in the Old Mutual Albaraka offering since 2005. Both the balanced and equity fund is managed according to a team based approach. Old Mutual manages these funds in partnership with Albaraka Bank and Channel Islam who provide distribution, branding and Shariah compliance support. Quantitative Investments looks to create long term wealth by focussing on building superior portfolios. The focus of the research process is at the portfolio creation level (as opposed to stock picking), and they follow a strong quantitative process which looks at equities and risk on an objective basis. The fund is managed using a strategy they call “Managed Volatility” which looks to systematically manage the volatility of the portfolio to generate a smooth return profile without sacrificing returns in the long term. To do this they use an in-house minimum variance optimisation method. The process looks to take advantage of mispricing of risk as well as value and momentum factors. The fund has a three tiered compliance process to ensure that the fund is managed to their mandate and to Shariah law. Audits are done by Albaraka bank, an external auditor and the Shariah advisory board. In addition to the audit function the Shariah board also provides frequent guidance to the management team in terms of which investments would be deemed permissible. The non-permissible income in the funds is removed on adaily basis. The non-permissible income is distributed to charities and a charitable trust. The asset allocation is driven by their proprietary quantitative asset allocation model. The model looks at the relative value of equity compared to cash when determining the asset allocation. The greater the dividend yield relative cash yields the larger the allocation to equity, and vice versa. The local equity component mirrors that of the Old Mutual Albaraka Equity Fund and will typically comprise of 32.5% to 40% of the portfolio. The overall equity allocation in the fund is now limited to 60% as the fund has recently moved to the Multi Asset Medium Equity category. The international portion, comprising only of equity currently, was recently increased to 20% and is invested directly in global developed market stocks across the US, Europe and Asia. The international equity exposure is measured against a global Shari’ah index and is managed using a similar approach to the local component. The cash portion is fixed at 2% and is invested in a Shariah compliant savings account. The Shariah advisory board for these funds have advised against the use of Sukuk and as an alternative the team has opted to include equity/commodity conduits. These are promissory notes which are issued by a rated and approved Islamic or investment bank. The portion of these assets included in the fund range between 33-43%. The fund may not hold any local property.


2011 2012 2013 2014 2015 2016 2017 201880.0

100.0

120.0

140.0

160.0

180.0

200.0

Old Mutual Albaraka Balanced A 180.0 (ASISA) South African MA Medium Equity 191.4



STANLIB MM SHARI’AH BALANCED FOF

STANLIB MM Shari'ah Balanced FoF

DrawdownTime Period: 01/04/2014 to 31/03/2019

2015 2017 2019-8.0

-6.0

-4.0

-2.0

0.0

STANLIB MM Shari'ah Balanced FoF A (ASISA) South African MA High Equity

STANLIB MM Shari'ah Balanced FoF - Risk



1.037.770.000.001.00

100.00-0.670.00

0.137.661.95

-2.070.94

91.26-0.92

2.31

STANLIB MM Shari'ah Balanced FoF - Asset AllocationPortfolio Date: 31/03/2019


STANLIB MM Shari'ah Balanced FoF - Monthly Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year201920182017201620152014

0.42 2.88 1.200.58 -1.29 -1.36 2.70 -0.98 1.62 -0.17 4.29 -1.87 -2.48 -2.73 0.961.96 -0.54 1.17 0.58 -1.32 -0.73 2.68 1.47 0.96 3.23 -0.87 -1.19

-2.54 4.99 1.75 0.97 1.89 -2.09 1.78 1.28 -1.45 -2.48 1.57 0.481.68 -1.30 -1.71 0.12 -1.00 -1.36 5.10 -1.71 1.08

-0.977.526.03

5.89

Portfolio Manager: Jennifer Henry and Richo VenterFund Category: SA Multi-Asset High EquityBenchmark: Shari'ah ALSI 45%; STeFI (less 0.5%) 35%; Dow Jones Islamic World Index (ZAR) 15%; 3 MOnths USD LIBOR 5%Launch Date: 25 March 2015Fund Size: R 586 millionTIC: 2.07%

Objective: This a mutli-asset class (including foreign) Shari'ah complaint fund that aims to outperform the Shari'ah balanced fund peer group average, at risk levels consistent with peers in the category but lower than equity funds. The fund is diversified across asset classes, sectors and asset managers and aims to provide long-term growth of capital and income. This multi-manages fund of fund is designed to deliver superior investment returns consistently than deliver it through a single manager or mandate. This fund is suitable for investors who wish to invest in a Shari'ah compliant multi-asset solution, where they outsource asset allocation decision, and diversify single manager risk. This investment should be considered for long-term investments rather than short-term, and is aimed at investors with an investment horizon of at least five years.

The STANLIB Multi-Manager Shari’ah Balanced Fund of Funds (FoF) invests in other collective investment schemes (CISs) and therefore follows an approach that outsources the fund management. The fund is co-managed by Naweed Hoosenmia (BSc (Hons)) and Suhail Mohamed (BCom (Hons), MA (Islamic Finance), Hifzul Quraan). Suhail Mohamed also co-manages the Sharia’h Equity Fund with Henry Munzara. Mohamed is a specialist in Shari’ah-compliance and Shari’ah product development. The STANLIB Multi-Manager investment team is led by Chief Investment Officer Joao Frasco and manages mandates in excess of R150 billion. The underlying funds are Kagiso Islamic Balanced Fund (50%), Old Mutual Albaraka Balanced Fund (40%) and Old Mutual Albaraka Equity Fund (10%). The Kagiso Islamic Balanced Fund is managed by Abdulazeez Davids of Kagiso and both the Old Mutual Albaraka Balanced and Old Mutual Albaraka Equity funds are managed by Saliegh Salaam of Old Mutual’s Quantitative Investments boutique.

STANLIB Multi-Manager Investment team’s process includes ongoing due diligence of managers and construction of portfolios for different mandates over time. They follow a rigorous and disciplined manager research and selection process which begins with the analysis of the sector for which the portfolio is being built, and determining the key drivers of outperformance in that sector. The manager research team conducts thorough quantitative and qualitative analyses through extensive investment due diligence to identify managers that have the skill and ability to outperform. This results in the production of high conviction buy/hold/ sell lists, as well as mandate performance expectations under different environments, defining events and sell triggers/disciplines. The portfolio management team then constructs a framework for blending the highest quality managers into the portfolio that targets the key areas of outperformance and promotes diversification. The selected portfolio managers provide exposure to sources of market outperformance over the long term. Passive alternative are considered in the process and where used, they lower the portfolio costs. On a regular basis the portfolio is reviewed to ensure it is delivering on its long term objectives and from time to time changes are made to improve the structure and or risk return profile.

As this is a FoF, a relatively higher fee structure may result dues to each underlying CIS levying their own charges. The fund may invest in foreign securities and as a result, will be exposed to macroeconomic, political, tax, settlement and liquidity risks factors that may be different to similar investments in the South African market. Fluctuations or movements in exchange rates will therefore also affect the overall value of the fund.

Rolling ReturnsTime Period: 01/04/2016 to 31/03/2019Rolling Window: 1 Year 1 Month shift

04 05 06 07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-7.5

0.0

7.5

15.0

STANLIB MM Shari'ah Balanced FoF A (ASISA) South African MA High Equity

Retu

rn



SENTIO SCI HIKMA SHARIAH BALANCED

Sentio SCI Hikma Shariah Balanced


2016 2017 2018 2019-8.0

-6.0

-4.0

-2.0

0.0

Sentio SCI HIKMA Shariah Balanced B2 (ASISA) South African MA High Equity

Sentio SCI HIKMA Shariah Balanced - RiskTime Period: 01/10/2018 to 31/03/2019


1.037.77

-4.990.000.001.00

-0.61

1.477.03

-4.053.95

-0.220.78

-0.56

Sentio SCI HIKMA Shariah Balanced - Asset AllocationPortfolio Date: 31/03/2019


Sentio SCI HIKMA Shariah Balanced - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

0.26 2.53 1.95-0.13 -1.60 0.47 2.29 -0.71 2.25 -1.17 4.91 -1.46 -1.16 -2.93 0.911.76 -0.70 1.41 1.37 -2.68 -2.44 2.06 1.81 -0.56 0.79 -0.35 1.49

-1.50 0.92 -0.32 0.41 -2.07 -1.06 1.05

1.423.88

5.36

Portfolio Manager: Mohamed Mayet, Rayhaan Joosub, Imtiaz Suliman and Olwethu NotsheFund Category: SA Multi Asset High EquityBenchmark: SA Multi Asset High Equity averageLaunch Date: 1 June 2016Fund Size: R 106 millionTIC: 2.10%

Objective: Sentio SCI Hikma Shariah Balanced Fund will provide long term capital growth while preserving capital with a reasonable level of income that complies with Shariah (Islamic Law) and the standards prescribed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The manager invests in an actively managed balanced portfolio, with an equity exposure (including international equity) between 0% and 75% at all times. The investment policy followed by the manager will focus on achieving this by investing in a wide variety of asset classes such as equity securities, non-equity securities, listed property, money market instruments and assets in liquid form, both domestically and internationally, that have been approved for investment by the Shariah Supervisory Board or Shariah Advisory Committee from time to time. The portfolio shall invest in Shariah compliant domestic and global equities, domestic and global property companies, listed commodity ETFs, Sukuks, Shariah compliant instruments and listed equity capital protection instruments that have been approved for investment by the Shariah Supervisory Board from time to time.

Sentio Capital Management is guided by the wisdom of investing along the philosophical tenets of Islam bringing the innovation of their process into their products. Their investment philosophy therefore embraces and encompasses both the wisdom of the divine and by definition also the simple logic of investing ethically and profitably. Their passion for investing is therefore defined by the concept of amanah (or “trust”). This amanah encompasses more than the conventional understanding of trust and implies a divine injunction to protect, grow and equitably share in the profits without prejudice to either party. Sentio is at its core a bottom-up fundamental investor, which integrates detailed bottom up research with in-depth quantitative risk management to arrive at robust portfolios across various market styles. Their fundamental philosophy is valuation-driven and is completely integrated within a bottom-up risk management framework at stock/asset level and portfolio level. It is their belief that understanding theintrinsic value of an asset under varying conditions allows them to more clearly understand and invest in stocks without trying to forecast short-termearnings or macro variables only. Combining this focus on valuation with a robust risk management framework leads to a portfolio construction discipline that allows them to follow even contrarian calls with high conviction and confidence. Understanding the risks they take on and are prepared to take on, in their view, allow them to be on the front foot when market turmoil arises, so that they can take advantage of contrarian stockopportunities without being “frozen” in the momentum.


09/2016 03/2017 09/2017 03/2018 09/2018 03/201995.0

97.5

100.0

102.5

105.0

107.5

110.0

112.5

Sentio SCI HIKMA Shariah Balanced B2 107.6 (ASISA) South African MA High Equity 108.8



SHARI’AH-COMPLIANT EQUITY FUND RANGE

Shari'ah-Compliant Equity fund range

Funds:Element Islamic Equity SCI FundKagiso Islamic Equity FundOld Mutual Albaraka Equity Fund27four Shari'ah Active Equity Prescient FundSentio SCI Hikma Shariah General Equity


Time Period: 01/04/2016 to 31/03/2019

Std Dev

0.0 4.0 8.0 12.0 16.0 20.0 24.0 28.0-10.0

-6.0

-2.0

2.0

6.0

10.0

14.0

18.0

Element Islamic Equity SCI A Kagiso Islamic Equity A Old Mutual Albaraka Equity A

27four Shari'ah Active Eq. Prescient A1 Sentio SCI HIKMA Shariah General Eq B2 FTSE/JSE Shariah All Share PR ZAR

Ret

urn

Quartile Ranking

As of Date: 31/03/2019


-25.0-20.0-15.0-10.0-5.0

YTD 1 year 3 years 5 years

0.05.010.015.020.025.0


27four Shari'ah Active Eq. Prescient A1 Sentio SCI HIKMA Shariah General Eq B2 FTSE/JSE Shariah All Share TR ZAR

Ret

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Returns

As of Date: 31/03/2019 Source Data: Total ReturnYTD 1 year 3 years 5 years

Element Islamic Equity SCI AKagiso Islamic Equity AOld Mutual Albaraka Equity A27four Shari'ah Active Eq. Prescient A1Sentio SCI HIKMA Shariah General Eq B2FTSE/JSE Shariah All Share TR ZAR

5.75 10.07 8.57 2.715.73 10.25 9.16 5.726.31 1.12 0.94 4.291.33 2.20 1.45 5.147.95 8.36

10.10 16.68 7.55 0.86

Risk Statistics


Std DevMax

Drawdown(monthly)

UpPeriod

Percent

DownPeriod

PercentSharpe

RatioElement Islamic Equity SCI AKagiso Islamic Equity AOld Mutual Albaraka Equity A27four Shari'ah Active Eq. Prescient A1Sentio SCI HIKMA Shariah General Eq B2FTSE/JSE Shariah All Share TR ZAR

9.75 -6.95 54.55 45.45 0.12

9.61 -12.40 51.52 48.48 -0.678.33 -6.33 60.61 39.39 0.21

8.28 -8.05 48.48 51.52 -0.618.49 -8.43 54.55 45.45 -0.58

13.50 -11.57 54.55 45.45 -0.06

Maximum Drawdown: MonthlyTime Period: Since Common Inception (01/07/2016) to 31/03/2019

2016 2017 2018 2019-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0


27four Shari'ah Active Eq. Prescient A1 Sentio SCI HIKMA Shariah General Eq B2 FTSE/JSE Shariah All Share TR ZAR




07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-15.0

-7.5

0.0

7.5

15.0

22.5

Element Islamic Equity SCI A Kagiso Islamic Equity A Old Mutual Albaraka Equity A27four Shari'ah Active Eq. Prescient A1 Sentio SCI HIKMA Shariah General Eq B2 FTSE/JSE Shariah All Share TR ZAR

Ret

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27FOUR SHARI’AH ACTIVE EQUITY

27four Shari'ah Active Equity


2015 2017 2019-37.5-30.0-22.5-15.0-7.50.0

27four Shari'ah Active Eq. Prescient A1 FTSE/JSE Shariah All Share TR ZAR

27four Shari'ah Active Equity Prescient - RiskTime Period: 01/10/2018 to 31/03/2019

Inv Bmk1ReturnStd DevMax DrawdownTracking ErrorAlphaBetaSharpe Ratio

-1.976.57

-4.4316.76

-11.550.21

-1.65

4.3820.32

-11.160.000.001.000.16

27four Shari'ah Active Equity Prescient - Asset AllocationPortfolio Date: 31/12/2018


27four Shari'ah Active Equity Prescient - Monthly Returns


-0.47 1.13 0.672.55 -3.91 -1.24 4.15 -0.31 1.50 -1.87 4.79 -3.79 -3.84 -0.61 1.23

-0.08 0.35 1.01 0.79 -0.72 -2.06 4.02 1.73 -0.68 4.94 -1.54 -2.29-4.07 0.73 4.06 3.10 -2.01 -3.04 2.78 1.19 2.22 -3.02 -0.29 -0.980.41 5.01 -1.82 3.35 0.01 -1.64 5.76 -0.58 -3.17 3.57 1.50 -0.47

-1.65 3.73 2.72 2.19 1.97 2.45 3.52 1.52 -2.26 -0.48 -0.80 0.84

-1.855.310.2612.11

14.40

4.73

Portfolio Manager: Visio CapitalFund Category: SA Equity GeneralBenchmark: Average of the South African Equity General CategoryLaunch Date: June 2012Fund Size: R 217 millionTIC: 2.23%

Objective: The fund invests in SA listed Shari’ah compliant shares, and hence is suitable for investors with long term investment horizons (> 5 years). Fund returns are generated from a combination of both capital appreciation and dividends.

The fund is managed according to a consistent long term approach to analysing companies, whereby the fund manager looks for key characteristics and applies a bottom-up research process with a company and industry specific focus.

Proprietary models are used to analyse stocks in the portfolio, even for companies not in the portfolio. The investment team fosters an environment of independent thinking and avoids companies and investment instruments that is consider to be poorly governed. The manager strives to initiate, or support, shareholder resolutions aimed at adopting higher corporate governance standards and responsibility including in companies where the manager not have an investment.

Look for margin of safety before investing using conservative estimates and applying a stress test to potential downside risk. The fund is a concentrated portfolio of best ideas, backed by the manager’s best ideas and high conviction views. The general approach is long holding periods of stocks that they consider will provide good returns over the long period.


04 05 06 07 08 09 10 11 12

2016

01 02 03 04 05 06 07 08 09 10 11 12

2017

01 02 03 04 05 06 07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-20.0

-10.0

0.0

10.0

20.0

30.0

27four Shari'ah Active Eq. Prescient A1 FTSE/JSE Shariah All Share TR ZAR

Retu

rn



ELEMENT ISLAMIC EQUITY FUND

Element Islamic Equity

Element Islamic Equity SCI - RiskTime Period: 01/10/2018 to 31/03/2019


4.379.77

-4.0212.89-0.960.420.20

6.2820.40

-10.980.000.001.000.34


2015 2017 2019-37.5-30.0-22.5-15.0-7.50.0

Element Islamic Equity SCI A FTSE/JSE Shariah All Share TR ZAR

Element Islamic Equity SCI - Asset AllocationPortfolio Date: 31/03/2019


Element Islamic Equity SCI - Monthly Returns


0.12 5.10 0.500.72 -5.03 -0.02 3.44 -2.19 1.20 -0.92 4.69 -0.69 -1.46 -2.59 2.823.60 -0.31 1.96 0.08 -1.58 -0.95 4.83 3.02 -0.50 4.45 -1.47 -1.25-2.34 6.12 2.40 4.54 -2.02 -0.35 6.49 0.74 -1.14 -5.03 2.09 3.21-0.75 1.73 -5.35 3.49 -1.79 -4.26 -3.51 -1.26 -4.56 7.25 -6.28 2.153.67 1.28 1.05 2.04 0.64 1.86 2.28 -0.01 -4.33 -6.05 1.18 -0.35

-0.4612.2014.97-13.192.88

4.85

Portfolio Manager: Shamier KhanFund Category: SA Equity GeneralBenchmark: Average of Shari'ah General EquityLaunch Date: February 2006Fund Size: R 132 millionTIC: 2.10%

Objective: This is an actively managed domestic general equity portfolio, aiming to provide investors with Shari'ah compliant returns. It offers investors the opportunity to achieve long-term capital growth with moderate level of income. This is done by investing in a portfolio of listed equities that have been approved by the Shari'ah Supervisory Board in accordance with Islamic Principles.

Element has a long history and experience in the management of Shari’ah funds starting from 2000 when they managed the Old Mutual’s Islamic equity offering until the fund was taken in-house in 2005. They also managed the Symmetry Shar’iah Balanced fund from 2005 until 2010. Both the Shari’ah Equity and Balanced funds are managed in accordance to Element’s contrarian process and philosophy but with a Shari’ah overlay. The Element equity process is fundamentally a bottom up one that seeks to identify gaps between share price and intrinsic value. There are three key factors which they focus on during their management process. Firstly they look at value with the aim to identify stocks that will deliver a superior long term return; secondly, how much exposure they would like have to the stock in the portfolio; lastly they will also take into account the well-being of stakeholders. In addition to this Element also takes into account environmental, social and governance (ESG) principles when they evaluate shares. The social responsible component that filters through to the management of all their funds sets them apart from many peers within the retail space. The Shari’ah process comprises of qualitative screening that looks at the nature of the business followed by financial screening to ensure that the business complies with limitations set out by the AAOIFI board. The Non-Permissible Income (NPI) portion the fund is extracted on the receipt of dividends and does not enter the fund.


04 05 06 07 08 09 10 11 12

2016

01 02 03 04 05 06 07 08 09 10 11 12

2017

01 02 03 04 05 06 07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-20.0

-10.0

0.0

10.0

20.0

30.0

Element Islamic Equity SCI A FTSE/JSE Shariah All Share TR ZAR

Retu

rn



KAGISO ISLAMIC EQUITY FUND

Kagiso Islamic Equity

Kagiso Islamic Equity - RiskTime Period: 01/10/2018 to 31/03/2019


4.3820.32

-11.160.000.001.000.16

1.687.37

-4.3715.42-4.410.28

-0.47


2014 2019-37.5-30.0-22.5-15.0-7.50.0

Kagiso Islamic Equity A FTSE/JSE Shariah All Share PR ZAR

Kagiso Islamic Equity - Asset AllocationPortfolio Date: 31/12/2018


Kagiso Islamic Equity - Monthly Returns


0.70 2.91 2.031.32 -1.40 -2.38 3.91 -0.76 2.45 0.15 3.55 -1.03 -2.18 -2.24 0.573.91 -0.53 1.62 0.55 -2.59 -0.67 3.58 2.37 1.34 5.34 -1.80 -2.19-3.77 7.34 4.60 3.79 1.08 -2.71 3.44 3.52 -1.74 -3.24 3.90 0.87-1.42 3.68 -3.74 4.63 -1.51 -3.64 -1.64 -0.89 -4.59 5.67 -3.97 0.452.66 1.62 1.04 1.94 0.47 1.36 1.34 0.10 -2.11 -2.59 0.76 0.26

1.7011.0817.66-7.386.96

7.39

Portfolio Manager: Abdulazeez DavidsFund Category: SA Equity GeneralBenchmark: SA Equity General averageLaunch Date: 13 July 2009Fund Size: R 747 millionTIC: 1.69%

Objective: To provide steady capital growth and a total portfolio return that is better than the average general equity fund. The generation of income is of secondary importance. Investment Policy: In order to achieve these objectives the portfolio will employ a fundamental, bottom-up stock picking strategy, coupled with a proprietary multifactor investment model and process. The portfolio will generally be fully invested in a diversified portfolio of equity securities, have a minimum equity exposure of 75% and will not invest offshore. The portfolio will not invest in any interest bearing instruments. The portfolio's main bank account is with ABSA bank, making use of ABSA's Islamic banking services which cater specifically to Shari'ah Fund compliance. The portfolio may also include participatory interests or any other form of participation in portfolios of collective investment schemes or other similar schemes only where the scheme's initial registration is in South Africa.

Kagiso has been managing Shari’ah investments since 2009 when they launched the Kagiso Islamic Equity fund. In May 2011 they also launched a regulation 28 compliant Islamic Balanced fund. Kagiso’s house process and philosophy is applied to both funds, with an added Shari’ah compliance overlay. The valuation process is built on a combination of original, in-depth fundamental analysis and a multi-factor quantitative screening process. After an initial screening, approximately 100 shares are assessed. The first assessment summarizes the investment case, provides an estimation of cash-flows and an estimated valuation. The initial 100 shares are then reduced to about 66 which then undergo rigorous fundamental analysis which includes a meeting with management and an analysis of the company’s annual report. These reports also remain cognisant of current news-flow and ultimately look to produce investment ideas which will reflect in the equity portfolios. On the foreign equity side the process includes equity screening using Bloomberg and less detailed fundamental analysis. The results of fundamental analysis are then assessed along with a multi-factor screening tool which gauges the attractiveness of a share based on pre-determined factors. A ranking table is then generated. Over and above the Kagiso process there are additional filters implemented, namely: an industry screen, financial screens and additional screening for companies highlighted for inclusion. The industry screen removes stocks that would be deemed non-compliant accordance to Shari’ah law. The financial screens would ensure that those counters that passed through the industry screening also meet a series of financial criteria. Lastly the additional screening is simply an extra check to ensure that shares selected do indeed meet Shari’ah criteria. The funds are monitored by an internal Shari’ah advisory board.Non-permissible income is extrapolated in a seamless process as soon as dividends enter their accounts and are distributed to charities.

Rolling ReturnsTime Period: Since Common Inception (01/11/2010) to 31/03/2019Rolling Window: 1 Year 1 Month shift

12

2012

03 06 09 12

2013

03 06 09 12

2014

03 06 09 12

2015

03 06 09 12

2016

03 06 09 12

2017

03 06 09 12

2018

03 06 09 12 03-40.0

-20.0

0.0

20.0

40.0

Kagiso Islamic Equity A FTSE/JSE Shariah All Share PR ZAR

Retu

rn



OLD MUTUAL ALBARAKA EQUITY

Old Mutual Albaraka Equity


2015 2017 2019-37.5-30.0-22.5-15.0-7.50.0

Old Mutual Albaraka Equity A FTSE/JSE Shariah All Share PR ZAR

Old Mutual Albaraka Equity - Risk



4.3820.320.000.001.00

100.000.080.00

-2.8313.629.97

-13.980.60

80.92-0.9510.02

Old Mutual Albaraka Equity - Asset AllocationPortfolio Date: 31/12/2018


Old Mutual Albaraka Equity - Monthly Returns


0.79 4.37 1.060.25 -1.81 -2.28 3.27 -2.55 0.79 -0.90 6.50 -2.80 -3.59 -6.53 1.433.22 -1.00 0.78 -0.13 -2.38 -1.24 4.07 2.39 -0.15 4.13 -1.57 0.25

-3.58 8.37 1.31 0.21 1.50 -1.55 2.40 -0.46 -2.40 -3.99 1.49 0.483.33 3.70 -2.07 1.95 -2.73 -1.16 0.63 -1.64 -1.35 8.48 -3.28 1.97-0.18 2.51 1.15 1.68 0.65 1.87 0.52 -1.16 0.69 0.03 0.34 0.76

-8.508.403.277.459.16

7.81

Portfolio Manager: Saliegh Salaam, Warren Mcleod & Grant WatsonFund Category: SA Equity GeneralBenchmark: 85% Customised SA Shari'ah Equity Index; 15% S&P Developed Markets Large and Mid-Cap Shari'ah IndexLaunch Date: 01 June 1992Fund Size: R2, 1 BillionTIC: 2.00%

Objective: To achieve an investment medium for investors who, for moral, ethical, and/or religious reasons wish to exclude the sectors that invest in alcohol, tobacco, gambling, non-heal foodstuffs and fixed interest related securities. Previously known as the Southern Pure Specialist Fund.

The Old Mutual Albaraka Equity fund has been managed by Old Mutual’s Quantitative Investments boutique since 2005 (fund was launched in June 1992) as Old Mutual looked to bring the management of the fund in-house. The management of the fund follows a team based approach. Old Mutual manages these funds in partnership with Albaraka Bank and Channel Islam who provide distribution, branding and Shariah compliance support. Quantitative Investments looks to create long term wealth by focussing on building superior portfolios. The focus of the research process is at the portfolio creation level (as opposed to stock picking), and they follow a strong quantitative process which looks at equities and risk on an objective basis. The fund is managed using a strategy they call “Managed Volatility” which looks to systematically manage the volatility of the portfolio to generate a smooth return profile without sacrificing returns in the long-term. The manager also follows an absolute approach in managing their funds as they see losing money as key risk. To do this they use an in-house minimum variance optimisation method. The funds have a three tiered compliance process to ensure that the fund is managed to their mandate and to Shariah law. Audits are done by Albaraka bank, an external auditor and the Shariah advisory board. In addition to the audit function the Shariah board also provide frequent guidance to the management team in terms of which investments would be deemed permissible. The non-permissible income in the funds is removed on a daily basis. The non-permissible income is distributed to charities and a charitable trust.


04 05 06 07 08 09 10 11 12

2016

01 02 03 04 05 06 07 08 09 10 11 12

2017

01 02 03 04 05 06 07 08 09 10 11 12

2018

01 02 03 04 05 06 07 08 09 10 11 12

2019

01 02 03-40.0

-20.0

0.0

20.0

40.0

Old Mutual Albaraka Equity A FTSE/JSE Shariah All Share PR ZAR

Retu

rn



SENTIO SCI HIKMA SHARIAH GENERAL EQUITY

Sentio SCI Hikma Shariah General Equity


2016 2017 2018 2019-12.5

-10.0

-7.5

-5.0

-2.5

0.0

Sentio SCI HIKMA Shariah General Eq B2 FTSE/JSE Shariah All Share TR ZAR

Sentio SCI HIKMA Shariah General Equity- RiskTime Period: 01/10/2018 to 31/03/2019


6.2820.40

-10.980.000.001.000.34

2.219.65

-5.9113.87-4.940.38

-0.24

Sentio SCI HIKMA Shariah General Equity- Asset AllocationPortfolio Date: 31/03/2019


Sentio SCI HIKMA Shariah General Equity- Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

201920182017201620152014

2.23 3.04 2.470.66 -2.95 -0.04 3.22 -2.38 1.63 0.24 5.51 -2.11 -2.27 -3.72 0.632.82 -1.87 1.22 1.51 -3.10 -3.84 3.15 2.45 -1.27 0.52 -0.58 3.43

-2.44 2.53 -1.85 -0.26 -3.14 -1.10 1.07

-1.974.21

8.92

Portfolio Manager: Mohamed Mayet, Rayhaan Joosub, Imtiaz Suliman and Olwethu NotsheFund Category: South African General EquityBenchmark: Shariah Equity peer groupLaunch Date: 1 June 2016Fund Size: R266 millionTIC: 2.87%

Objective: The objective of the Sentio SCI Hikma Shariah General Equity Fund will be to achieve medium to long-term capital growth through investment across a number of sectors of the equity market with a reasonable level of income that complies with Shariah (Islamic Law) and the standards prescribed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The Manager shall seek to achieve this objective through active management of a portfolio of assets which comprise a mix of securities (including collective investment schemes in property) that reflect the investment managers view of the relative attractiveness of the different sectors of the Securities Exchange and Companies, assets in liquid form, participatory units in collective investment schemes,listed or unlisted, excluding interests in a collective investment scheme in participation bonds, and any other securities which are considered to be consistent with the portfolios investment objectives allowed by the Act from time to time. The portfolio shall invest in shariah compliant domestic and global equities, domestic and global property companies and listed equity capital protection instruments that have been approved for investment by the Shariah Supervisory Board.

Sentio Capital Management is guided by the wisdom of investing along the philosophical tenets of Islam bringing the innovation of their process into their products. Their investment philosophy therefore embraces and encompasses both the wisdom of the divine and by definition also the simple logic of investing ethically and profitably. Their passion for investing is therefore defined by the concept of amanah (or “trust”). This amanah encompasses more than the conventional understanding of trust and implies a divine injunction to protect, grow and equitably share in the profits without prejudice to either party. Sentio is at its core a bottom-up fundamental investor, which integrates detailed bottom up research with in-depth quantitative risk management to arrive at robust portfolios across various market styles. Their fundamental philosophy is valuation-driven and is completely integrated within a bottom-up risk management framework at stock/asset level and portfolio level. It is their belief that understanding theintrinsic value of an asset under varying conditions allows them to more clearly understand and invest in stocks without trying to forecast short-termearnings or macro variables only. Combining this focus on valuation with a robust risk management framework leads to a portfolio construction discipline that allows them to follow even contrarian calls with high conviction and confidence. Understanding the risks they take on and are preparedto take on, in their view, allow them to be on the front foot when market turmoil arises, so that they can take advantage of contrarian stock opportunities without being “frozen” in the momentum.


09/2016 03/2017 09/2017 03/2018 09/2018 03/201990.0

95.0

100.0

105.0

110.0

115.0

120.0

125.0

Sentio SCI HIKMA Shariah General Eq B2 104.6 FTSE/JSE Shariah All Share TR ZAR 121.5



SHARI’AH-COMPLIANT GLOBAL EQUITY FUND RANGE

Shari'ah-Compliant Global Equity fund range

Funds:

Element Islamic Global Equity SCI Fund


Time Period: 01/04/2016 to 31/03/2019

Std Dev

-3.0 2.0 7.0 12.0 17.0 22.0 27.0-5.0

-1.0

3.0

7.0

11.0

15.0

19.0

Element Islamic Global Equity SCI A (ASISA) Global EQ General

Ret

urn

Quartile Ranking

As of Date: 31/03/2019


-20.00.020.040.060.0

YTD 1 year Since Inception

80.0100.0120.0140.0160.0


Ret

urn

Returns

As of Date: 31/03/2019 Source Data: Total Return

YTD 1 year SinceInception

InceptionDate

Element Islamic Global Equity SCI A(ASISA) Global EQ General

26/10/201231/07/1992

8.07 16.40 12.0912.87 21.08 11.07

Risk StatisticsTime Period: Since Common Inception (01/11/2012) to 31/03/2019

Std DevMax

Drawdown(monthly)

UpPeriod

Percent

DownPeriod

PercentSharpe

Ratio

Element Islamic Global Equity SCI A

(ASISA) Global EQ General

15.79 -18.67 57.14 42.86 0.35

15.66 -15.75 57.14 42.86 0.58

Maximum Drawdown: Monthly


2013 2015 2017 2019-20.0

-15.0

-10.0

-5.0

0.0





12

2014

03 06 09 12

2015

03 06 09 12

2016

03 06 09 12

2017

03 06 09 12

2018

03 06 09 12

2019

03-20.0

0.0

20.0

40.0

60.0


Ret

urn


ELEMENT ISLAMIC GLOBAL EQUITY FUND

Element Islamic Global Equity


2013 2015 2017 2019-20.0

-15.0

-10.0

-5.0

0.0


Element Islamic Global Equity SCI - RiskTime Period: 01/10/2018 to 31/03/2019

Inv Bmk1ReturnStd DevMax DrawdownTracking ErrorAlphaBetaSharpe Ratio

-5.9817.56

-14.924.36

-10.480.89

-1.03

-1.4919.31

-12.760.000.001.00

-0.44

Element Islamic Global Equity SCI - Monthly ReturnsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

20192018201720162015

-2.21 7.33 2.960.28 -5.50 -1.87 6.11 1.04 9.63 -1.71 12.10 -4.41 -3.13 -6.12 -4.34

-1.54 -0.05 2.66 1.36 -0.98 -0.75 1.28 -2.00 5.74 5.19 -2.46 -6.53-4.37 1.86 -2.25 -2.76 10.19 -7.82 -0.84 5.44 -7.25 -5.21 3.94 -0.730.65 3.44 3.17 0.30 3.30 -3.15 5.62 -0.74 -0.94 8.08 3.89 5.46

0.161.29

-10.7932.56

6.89

Element Islamic Global Equity SCI - Asset AllocationPortfolio Date: 31/03/2019


Portfolio Manager: Shamier KhanFund Category: Global Equity GeneralBenchmark: Dow Jones Islamic Market World Index ReturnLaunch Date: October 2012Fund Size: R 75 millionTIC: 2.53%

Objective: To achieve long term capital appreciation without concentrating on income requirements and to create an internationally diversified equity portfolio for investors. The investment policy followed by the manager will focus on achieving this growth for investors by investing in international equity securities, listed property, money market instruments and assets in liquid form, that have been approved for investment by the Shari’ah Supervisory Board from time to time.

Element has extensive experience in the management of Shari’ah funds starting from 1992 when they managed the Old Mutual Albaraka Equity fund until the fund was taken in-house in 2004. They also managed the Symmetry Shari’ah Balanced fund from 2005 till 2012. Both the Shari’ah Equity, Balanced and Global funds are managed in accordance to Element’s contrarian process and philosophy but with a Shari’ah overlay. The Element equity process is fundamentally a bottom up one that seeks to identify gaps between share price and intrinsic value. The Element Islamic Global Equity fund uses Credit Suisse to access a universe of global stocks. Stocks provided by Credit Suisse go through Element’s Shari’ah screens. These screens are performed by Ideal Ratings, an agency that looks at the nature of the business followed by financial screening to ensure that the businesscomplies with limitations set out by the AAOIFI board. Once these screens are successful shares will be scored on operational and financial metrics. Funds are then valued based on cash flow return of an investment which are normalized over a cycle. A momentum factor is taken into consideration to identify contrarian opportunities. The top 50 ranked opportunities are presented to the Element Supervisory Board. Shares that are selected are purchased directly by the fund and held in their global custodian account. The Non-Permissible Income (NPI) portion is extracted by Element as the dividend is declared. This fund is ideal for investors who seek Shari’ah compliant global equity returns without having to purchase foreign currency.

Investment GrowthTime Period: Since Common Inception (27/10/2012) to 31/03/2019

2013 2014 2015 2016 2017 2018 201950.0

100.0

150.0

200.0

250.0

300.0

Element Islamic Global Equity SCI A 208.0 (ASISA) Global EQ General 255.3


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Documents

SHARI’AH FUND GUIDE · 2020-03-01 · Darren is a CFA charter holder and holds a degree in Investment Management (University of Stellenbosch) and a BCom (Hons) in Financial Analysis