Islamic and ESG investing specialist, Saturna Capital, will replace Almalia as the manager of its Shariah-compliant active equity ETF.

The Almalia Sanlam Active Shariah Global Equity UCITS ETF (AMAL) launched in September last year under the join management of Almalia and Sanlam Investments.

AMAL applied an investment screen operated by a Shariah Panel of scholars and experienced Islamic investors from Amanie Advisors.

Its end goal was to create a product in keeping with Shariah principles, meaning AMAL had to be asset-backed, ethical, share risks equitably and have strong governance. 

Following a reshuffle announced last week, AMAL will now take a different approach under the stewardship of Saturna.

While its initial rendition was listed on the London Stock Exchange, its rebranded iteration, the Saturna Al-Kawthar Global Focused Equity UCITS ETF, will also trade on the Borsa Italiana and Deutsche Boerse. The total expense ratio (TER) has also been slashed from 0.99% to 0.75%.

The way AMAL applies its compliance with Shariah law has also changed. It will look to invest in 30 to 40 Shariah-compliant stocks – currently 22 – that also perform well on environmental, social and governance (ESG) and quality factor metrics.

As part of this, Saturna will look at potential constituents’ balance sheets to prioritise those with minimal debt and cash flows greater than their investment requirements, meaning they can remain self-funded.

Additionally, companies will only be considered for inclusion if they are deemed to have a record of strong returns on capital and are not involved in activities prohibited by Shariah law (Haram).

Prior to taking the lead on AMAL, Saturna boasted almost 32 years of experience in Islamic investing, having launched its Amana Growth, Amana Income and Amana Developing World funds in 1989, 1994 and 2009, respectively.

Hector McNeil, co-CEO and co-founder of white label issuer HANetf, which co-launched AMAL, told ETF Stream: “Saturna are the largest Islamic money manager in the US. It has been looking at entering the European mutual fund market and the AMAL news made them consider an ETF with us.”

In July this year, the two companies partnered for the first time to launch the Saturna Sustainable ESG Equity HANzero UCITS ETF (SESG), Europe’s first carbon-offset actively-managed ESG ETF.

McNeil continued: “As we got to know Saturna, they asked us about AMAL and if they could get involved. We discussed with Almalia who, as a start up in Dubai, had several other initiatives ongoing and were happy to discuss stepping aside and allowing Saturna to reengineer AMAL.

He added Saturna’s track record in Islamic investing, active management and their intention to expand into Europe means the partnership on AMAL is favourable for both parties.

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