Azzad Creates Opportunities by Cutting Through Red Tape
5/23/2013 10:38:01 AM
How Azzad makes Islamic bank deposits available to clients
Opening up new markets to investors isn’t easy. If you don’t believe me, just ask Jamal Elbarmil. “No one is willing to cut through all the red tape to invest in Islamic banks,” says the longtime Azzad Wise Capital Fund Portfolio Manager. “No one except Azzad.”
Elbarmil starts his Tuesday with a cup of coffee in one hand and a manila folder in the other. Two computer monitors glow behind him. He’ll turn his attention to those shortly. (As usual, he’s got a long day ahead of him.) Right now, what’s holding his attention is a notarized copy of Azzad Asset Management’s articles of incorporation, not the usual analyst reports, balance sheets, and income statements that take up a lot of his time. But this diversion is a necessary evil, an additional responsibility for the unconventional money manager. He’s making sure everything is in order before the folder is sent to Turkey. Its contents represent one of the many hurdles in a miles-long race to get a piece of the growing Islamic banking market for his Fund, which turned three-years old in April. For Elbarmil to invest in an Islamic bank deposit or note, “there’s a lot of red tape,” he says. The partner bank requires investors to send over a mountain of paperwork, which must all be notarized at each level of government, culminating with a trip to the U.S. State Department’s notarization bureau to get the final seal from the U.S. Secretary of State. Sound like a lot of work? It is. And it’s only a small part. “This is for one position in a profit- and loss-sharing account at one Islamic bank,” notes Elbarmil. “We do this for every bank we partner with. And before tackling the bureaucracy, we have to finish our own due diligence on the bank, which can take even longer than all the filings and notarizations.”
Elbarmil says that the manual process is necessary since these types of investments are not common and there aren’t established channels to invest in Islamic bank deposits or notes: “It’s not like buying IBM stock. You can’t get these alternative investments with a few clicks of a mouse.” The red tape, plus the language barriers one can encounter with foreign partners, makes for a painstaking and time-consuming production. But according to Elbarmil, it’s worth it: “We’re creating a process. It’s about giving our investors access to new and emerging markets. That’s something they couldn’t do on their own as individual investors. We’re cutting through the red tape for them.”
Opinions expressed are those of the author or fund manager, are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security and should not be considered investment advice.
Fund holdings and sector allocations are subject to change and are not a recommendation to buy or sell any security. Click here for Azzad Ethical Fund current top 10 holdings. Click here for the Azzad Wise Capital Fund current top 10 holdings.
Past performance does not guarantee future results.
The Azzad Ethical Fund is non-diversified and may invest a larger percentage of its assets in fewer companies exposing it to more volatility and/or market risk than diversified funds. The Fund may not achieve its objective and/or could lose money on your investment in the Fund. Stock markets and investments in individual stocks can decline significantly in response to issuer, market, economic, political, regulatory, geographical, and other conditions. Investments in mid-cap companies can be more volatile than investments in larger companies. Investments in growth companies can be more sensitive to the company’s earnings and more volatile than the stock market in general. Because the portfolio may invest substantial amount of its asset in issuers located in a single country or in a limited number of countries, it may be more volatile that a portfolio that is more geographically diversified. See the prospectus for more details about risks.
Investments in smaller and medium sized companies involve additional risks such as limited liquidity and greater volatility. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower rated and non-rated securities present a great risk of loss to principal and interest than higher rated securities.
The Azzad Wise Capital Fund is non-diversified with a high concentration of securities in the financial sector which can expose the Fund to more volatility and/or market risk than diversified funds. The Fund may not achieve its objective and/or could lose money on your investment in the Fund. The Fund mainly invests in securities issues by foreign entities which expose the Fund to country specific risks such as market, economic, political, regulatory, geographical, and other risks. The Fund intends to invest in certain instruments that may be illiquid. As a result, if the Fund receives large amount of redemptions, the Fund may be forced to sell such illiquid investments at a significant loss to be able to meet such redemption requests. See the prospectus for more details about risks.