Real Estate Investment Trust Portfolio
We manage our real estate investment trust (REIT) portfolio in-house at Azzad.
Part of the Azzad Ethical Wrap Program
A comprehensive halal wealth management solution for high net worth clients, organizations, and business owners.
PERFORMANCE
Quarter and year-to-date returns are not annualized.
GIPS performance inception date is 4/1/2004.
Performance inception date is 3/1/2004. The performance is reported in U.S. dollars. The performance quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Net returns are reduced by all fees, transaction costs and are gross of foreign withholding taxes. Performance includes reinvestment of dividends and other earnings. Gross returns are gross of all fees and transaction costs. For more recent quarter-end performance information, call 888.862.9923. The Dow Jones U.S. Select Real Estate Securities Index represents equity real estate investment trusts and real estate operating companies traded in the U.S. The Dow Jones U.S. Select REIT Index is a subset of the Dow Jones Americas Select RESISM and includes only REITs and REIT-like securities. The index is unmanaged, and does not reflect the deduction of expenses, which have been deducted from the model’s returns. The index’s return assumes reinvestment of all distributions and dividends; you cannot invest directly in an index.
TOP 5 REIT HOLDINGS
as a percentage of the total portfolio
| Prologis Inc | 20.22 |
| Equinix Inc | 8.55 |
| AvalonBay Communities Inc | 6.44 |
| Equity Residential | 6.41 |
| Mid-America Apartment Communities Inc | 6.03 |
As of 9/30/2023. For illustrative purposes only; subject to change. Model portfolio holdings and allocations are subject to change and are not a recommendation to buy or sell any security.
WHAT ARE REITs?
Real estate investment trusts are companies that buy, sell, develop, and manage real estate such as office buildings, apartment complexes, shopping malls, self-storage units, and housing developments.
REITs make money from rental income, services to tenants, and profits from the sale of properties.
REITs also receive special tax considerations: they don’t have to pay taxes as long as they pay out at least 90% of their net income to their shareholders. Because of this, successful REITs can offer investors high yields, current income, and moderate growth.
SPECIAL REIT REQUIREMENTS
To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
In addition to paying out at least 90 percent of its taxable income annually in the form of shareholder dividends, a REIT must:
- Be an entity that would be taxable as a corporation but for its REIT status;
- Be managed by a board of directors or trustees;
- Have shares that are fully transferable;
- Have a minimum of 100 shareholders after its first year as a REIT;
- Have no more than 50 percent of its shares held by five or fewer individuals during the last half of the taxable year;
- Invest at least 75 percent of its total assets in real estate assets and cash;
- Derive at least 75 percent of its gross income from real estate related sources, including rents from real property and interest on mortgages financing real property;
- Derive at least 95 percent of its gross income from such real estate sources and dividends or interest from any source; and
- Have no more than 25 percent of its assets consist of non-qualifying securities or stock in taxable REIT subsidiaries.
MEET THE MANAGER
Azzad Asset Management is a registered investment adviser headquartered in the suburbs of Washington, D.C.
Azzad is committed to managing clients’ money according to a socially responsible investment philosophy based on faith-based values and incorporating a rigorous and disciplined investment approach.
Azzad believes that companies operating in ethical lines of business offer relatively less business risk and are in a better position to thrive in the long-term.
The firm’s proprietary screening process allows the manager to prudently manage client assets in a manner consistent with their values.
OBJECTIVE & STRATEGY
Azzad’s real estate investment trust (REIT) portfolio seeks to achieve a return equal to or greater than the Dow Jones US Select REIT Index.
REIT securities tend to pay high dividends because by law the majority of earnings must be distributed to shareholders.
The portfolio generally holds fewer than 30 companies and therefore is highly concentrated with low leveraged stocks.
The REIT strategy is managed by an internal investment team at Azzad. After screening the entire universe of potential portfolio components for consistency with Azzad’s ethical investment guidelines, the investment team employs quantitative criteria to assess a company’s future earnings growth potential.
The portfolio is constructed with a bias to large-cap REITs. Non-REIT stocks that are concentrated in the real estate industry may also be added to the portfolio when the managers believe they may potentially provide alpha and greater diversification.
Portfolio Facts
Inception date: April 1, 2004
Asset class: REITs
Portfolio manager: Azzad Asset Management
Investment approach: Bottom-up
Benchmark: Dow Jones US Select REIT Index
Azzad Ethical Wrap Program minimum investment: $500,000
For more information: 888-862-9923
INVESTMENT PROCESS
There are several types of REITs. The most common type is an equity REIT.
Azzad’s REIT strategy invests primarily in equity REITs to avoid companies that derive income from interest, as mortgage REITs do.
ACCESS THIS STRATEGY
Our REIT portfolio is offered through the Azzad Ethical Wrap Program. The minimum initial investment for the program is $500,000.
If you’d like to learn more, please contact us and one of our financial advisors can help you decide if the wrap program is a good fit for your needs.
IMPORTANT INFORMATION
Investing involves risk, including the possible loss of principal. Please read the following important disclosures.
Performance may be negatively affected by factors with an adverse effect on companies in the real estate industry, such as changes in property values, taxes, interest rates, occupancy rates, government regulations, and potential liability under environmental and hazardous waste laws. Investing in dividend yielding stocks could fall out of favor and returns would subsequently trail returns from the overall stock market.
Moreover, to the extent that a portfolio favors a growth style, the risk is that the values of growth securities may be more sensitive to changes in current or expected earnings than the values of other securities. To the extent a portfolio uses a value style, the risk is that the market will not recognize a security’s intrinsic value for a long time, or that a stock judged to be undervalued may actually be appropriately priced.
Investments in securities involve risks and there is no guarantee that a strategy will achieve its objectives. As with all stock investments, you may lose money investing in a portfolio. Azzad’s portfolios generally avoid companies in certain economic sectors and businesses due to Azzad’s socially responsible investment restrictions. Therefore, their performance may suffer if these sectors and/or businesses outperform the overall stock market.
Each portfolio is nondiversified and may invest a larger percentage of its assets in fewer companies exposing it to more volatility and/or market risk than a diversified portfolio. Each portfolio is generally available only through one of Azzad’s asset allocation strategies and is not designed by itself to be a comprehensive, diversified investment plan.
All of Azzad’s models are actively managed. Active trading of securities may increase your account’s short-term capital gains or losses, which may affect the taxes you pay. Short-term capital gains are taxed as ordinary income under federal income tax laws. When reviewing your actual performance, holdings and asset allocation, note that different accounts, even though they are traded pursuant to the same strategy, can have varying results. The reasons for this include: i) the period of time in which the accounts are active; ii) the timing of contributions and withdrawals; iii) the account size; iv) the minimum investment requirements and/or withdrawal restrictions; and v) the actual fees charged to an account. There can be no assurance that an account opened by any person will achieve performance returns similar to those provided on this page.
You should consider investing in the Ethical Wrap Program if you are looking for long-term returns and are willing to accept the associated risks. The Ethical Wrap Program is made available through a Wrap Brochure which contains important information about our firm, strategies, risks and conflicts of interest. Please request a copy of our Wrap Brochure, Part 2A of the firm’s Form ADV and your representative’s Part 2B by calling 888.862.9923 before investing in the Wrap Program or opening an account with us.
Azzad Asset Management is an independently registered investment adviser. Azzad Asset Management claims compliance with the Global Investment Performance Standards (GIPS®). To obtain GIPS-compliant performance information including a GIPS Composite Report for the firm’s strategies and products, please call 888.862.9923 or send an email to info@azzad.net.