What should you do now that the Fed has raised rates again?

In mid-December, the Federal Reserve raised interest rates again, contributing to some of the whipsaw volatility we saw at the end of the year. As an investor, you may be wondering what you should do now. Consider these three things: Review your portfolio Does your asset allocation still match your time horizon, risk tolerance, and investment goals? If so, you might consider leaving things unchanged. It might not sound like a special strategy, but most people miss out on the long-term gains of the market by making moves at the wrong time. Keep on keeping on There will probably be more volatility in store. Embrace it. The S&P 500 stock index has become more turbulent in 12 of the last 14 tightening cycles, including this one. But that shouldn’t mean a whole lot to a long-term investor. Ride the market’s ups and downs, and you could be rewarded for your patience. Diversify Treasury bonds are most sensitive to movements in interest rates. As an alternative form of fixed income investment, consider high-quality trade finance investments and sukuk, both of which offer liquidity and diversification benefits in a rising rate environment. And for some serious diversification, it’s hard to beat participation

January 4, 2019 No Comments

GCC nations, Islamic debt assets to receive billions as region diversifies from oil

Debt markets in Gulf Cooperation Council (GCC) countries have historically been unable to qualify for inclusion in emerging-market fixed income indexes or any other major fixed income index, which has resulted in lost investment in the region. But that’s all about to change. Next year, GCC countries are slated for inclusion in the prominent J.P. Morgan Emerging Market Bond Index (EMBI), marking a high water point for both the region and the larger fixed income universe. J.P. Morgan is planning to add sovereign and quasi-sovereign debt issuers from Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, and Kuwait to the index between January 31 and September 30, 2019. This change will bring all GCC member states into the index, which is a key performance benchmark for emerging market investors. According to J.P. Morgan’s analysis, the GCC region could represent 12 percentage points in the index by the time the new GCC countries are phased in, which means upwards of $20 billion in cash inflows into the region. This could bring total index representation from the Middle East up to 18%, putting it on the same level as emerging markets in other regions like Europe (22%) and Asia (17%). Why the

December 7, 2018 No Comments

Portfolio Manager Spotlight: Federated Investment Management

In the past three months, we’ve seen bond markets struggle against a backdrop of rising rates and geopolitical tensions. Here’s how Azzad’s fixed-income portfolio manager, Federated Investment Management Company, handles the challenge. In the second quarter of 2018, many bond funds struggled as rates increased. The Federal Reserve raised rates two times in the first half of 2018 and signaled two further hikes to come this year. All of this comes as inflation reached the Fed’s target rate faster than previously forecast and unemployment continued to fall. Given this backdrop of rising rates and geopolitical tensions, many bond funds lost ground over the second quarter, though funds boasting shorter durations and U.S. dollar exposure proved to be the exception to this rule. Not so for the Azzad Wise Capital Fund (ticker: WISEX), which eked out a positive return in a challenging quarter. WISEX is managed by Federated Investment Management Company, a subsidiary of Federated Investors, Inc. Founded in 1955 and based in Pittsburgh, Penn., Federated is widely considered to be a pillar in the money management universe, with $255 billion in assets under management at the end of 2017. Federated took over managing WISEX in 2014. Under its watchful eye,

August 6, 2018 No Comments

Not Islamic enough? Why a sukuk issuer now claims its ‘Islamic bond’ isn’t worthy of the name

When are Islamic bonds not really Islamic? If you’re Sharjah-based energy company Dana Gas, the answer is: whenever the company says so. In June, the company announced that it no longer considered its two Islamic bonds, issued in 2013 and valued at $700 million, to be Shariah compliant under United Arab Emirates law. After Dana Gas made the claim that its debt is “unlawful and unenforceable,” a UAE court stopped bondholders from taking action against the company pending its review of the case. Market observers see the move by Dana Gas as a shrewd move to avoid its current obligations and cut costs as it focuses on preserving cash following years of difficulty collecting on outstanding payments from clients in Egypt and the Kurdish region of Northern Iraq. Bloomberg reports that the company is owed about $1 billion from Egypt and Kurdistan and had about $298 million of cash on hand at the end of March. Rather than inconveniencing equity owners in the company, executives appear to have instead opted to press its sukukholders to agree to a restructuring of terms that, according to Dana Gas, are more in keeping with the principles of Islamic finance but are also lower-yielding

July 10, 2017 No Comments

Why sub-zero interest rates are good for Asian debt

The BOJ effect Why sub-zero interest rates are good for Asian debt Despite warnings that outflows following the 2013 “taper tantrum” would continue into this year, investor interest in emerging market (EM) debt — specifically Asian — has made a comeback. July’s asset inflows for EM debt funds, for example, stood at $13.3 billion globally, the highest monthly total for the category since Morningstar began collecting data. The asset class has benefited from several tailwinds since the start of the year, including a rebound in commodity prices and a restrained U.S. dollar. But central bank intervention, specifically negative interest rates in the developed world, stand out as the proximate cause for recent attention. Asian credit markets in particular have benefited from easy money. The Bank of Japan, which adopted negative rates in early 2016, has taken extreme measures in an effort to counter deflationary trends in the country, including yield curve management. The impact on Asia is most pronounced in Indonesian and Malaysian debt. Take, for instance, sukuk from the region. These Islamic bonds have enjoyed outsized attention thanks to BOJ intervention. In addition to the low levels of sukuk issuance, negative rates have created what experts describe as a

October 17, 2016 No Comments

Azzad participates in US-Saudi investment forum

WASHINGTON, Sept. 4, 2015 — A delegation from Azzad Asset Management joined representatives from the Saudi Arabian and U.S. business communities in Washington, D.C., for a conference designed to foster trade ties between the two nations. Azzad, a leader in socially responsible halal investing in the United States, has investments in Saudi Arabia through its international fixed-income fund. The U.S.-Saudi Investment Forum, organized by the Saudi Arabian General Investment Authority in conjunction with the Council of Saudi Chambers and the U.S.-Saudi Business Council, served as an opportunity for executives and officials to explore investments in energy, transportation, health, education, and financial services. Signing ceremonies between U.S. and Saudi businesses were a feature of the event. “As an interested party that has found ample investment opportunities in the Kingdom of Saudi Arabia, Azzad is pleased to take part in this important gathering of dignitaries and captains of industry,” said Azzad President and CEO Bashar Qasem, who attended the conference. During a morning session, Mr. Qasem signed a memorandum of understanding with Ziad Al-Bassam of the Al-Bassam Investment Group, to formalize an agreement between Azzad and Al-Bassam to share financial expertise and to locate investment opportunities in the Middle East. Azzad is

September 4, 2015 No Comments

Azzad participates in AAOIFI-World Bank conference on Islamic finance

Manama, Kingdom of Bahrain, November 25, 2014 — Representatives from Azzad Asset Management joined leading scholars and senior representatives from central banks, financial institutions, and regulators from over 35 countries this month in the Kingdom of Bahrain for an annual conference on Islamic finance organized by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Organized in cooperation with the World Bank and under the auspices of the Central Bank of Bahrain, the conference focused on integrating Islamic finance into global reporting standards and its compatibility with the legal systems of non-Muslim majority countries, including those in the West. “As an AAOIFI member, I am pleased to attend this important gathering of practitioners and thought leaders,” said Azzad President and CEO Bashar Qasem, CSAA, who attended the conference. “And as the president of a company dedicated to the strict adherence of AAOIFI standards in the way we do business, we are supportive of their efforts to harmonize Islamic finance standards across borders and to promote greater transparency. Both are of critical importance to our industry.” Mr. Qasem is one of the few Islamic finance professionals in the United States to have earned the Certified Shariah Adviser and Auditor (CSAA) accreditation

November 25, 2014 No Comments

First US halal fixed-income mutual fund celebrates 4th anniversary

Shariah-compliant Azzad Wise Capital Fund lets American Muslims ‘invest with faith’ FALLS CHURCH, Va., April 21, 2014 — The Azzad Wise Capital Fund (NASDAQ: WISEX), America’s first halal, socially responsible fixed-income mutual fund turned four years old this month. Falls Church, Virginia-based Azzad Asset Management launched the interest-free fund in 2010. “It wasn’t easy to do, but we were determined to create a fixed-income solution for our clients who wanted to observe the tenets of their faith,” said Bashar Qasem, Azzad president and CEO, on starting the fund. “Today, the Azzad Wise Capital Fund has a following among retail investors and financial advisors alike. They also appreciate the fund’s exposure to emerging markets and an alternative asset class like sukuk.” Over its four-year history, the Azzad Wise Capital Fund has proven to be an important diversification and income-generating tool for investors who observe the Islamic prohibition on the giving and taking of usury, or interest. Although it does not deal with debt instruments created from interest-based lending, the Azzad Wise Capital Fund shares in the gains from its ventures, which include Islamic bank deposits and sukuk. Qasem started Azzad Asset Management in 1997 after discovering a lack of financial solutions

April 21, 2014 No Comments

Azzad analysis featured in 2014 Thomson Reuters Sukuk Report

Paper focuses on challenges and opportunities of investing in global Islamic bonds (Falls Church, Virginia, 12/3/13) – An analysis of the international sukuk market prepared by Azzad Asset Management has been published in the 2014 Thomson Reuters Sukuk Perceptions and Forecast Study. The research paper, which focuses on sukuk investing from a practitioner’s perspective, was produced by Azzad’s fixed-income research team. “We often hear about the theoretical application of sukuk investing and Islamic finance in general,” said Azzad analyst Ahsan Raheem, CFA, the paper’s lead author. “Our analysis highlights some of the practical issues facing sukuk investors. They come from our experience at Azzad constructing and managing a portfolio of Islamic fixed-income investments, including sukuk, for the Azzad Wise Capital Fund.” The Azzad Wise Capital Fund (NASDAQ: WISEX) is the first halal fixed-income mutual fund in the United States, investing primarily in sukuk and Islamic bank deposits. The fund celebrated its three-year anniversary in April. The 2014 Sukuk Perceptions and Forecast Study, produced by Thomson Reuters, was launched in November at the Global Islamic Economy Summit in the United Arab Emirates, organized by Thomson Reuters and the Dubai Chamber of Commerce and Industry. It is based on a comprehensive survey of

December 3, 2013 No Comments

Azzad Wise Capital Fund Celebrates 3rd Anniversary

FALLS CHURCH, Va., April 23, 2013 — The Azzad Wise Capital Fund (NASDAQ: WISEX), America’s first fixed-income mutual fund that invests in sukuk, turned three years old in April. It is categorized as a short-term bond fund and is designed for capital preservation and income. “We’re pleased to see continued interest in our socially responsible investment approach,” says Bashar Qasem, president and CEO of the fund’s investment advisor, Azzad Asset Management. “And investors are telling us that they appreciate a fund that allows them exposure to both emerging markets and an alternative asset class.” The Azzad Wise Capital Fund invests primarily in notes and certificates issued for payment by international financial institutions and foreign governments in compliance with the investment advisor’s ethical guidelines. Sukuk (Islamic bonds) are among the products held by the Fund. Sukuk are bond-like instruments issued to obtain an up-front payment in exchange for an income stream to be generated from assets held by the issuer. A major distinction between conventional bonds and sukuk is that sukuk are asset-backed and investors hold an equity stake in those assets. “Our shareholders know that we carefully vet each holding before adding it to the fund. This means painstaking research

October 17, 2013 No Comments