Five things to consider before you invest

Five things to consider before you invest

Zubair Khan, CFA®, CFP® Many investors share a common worry: figuring out the best time to get started.  Their concern often comes from negative news about the markets. But if you waited until the news about markets was all good, you might never take the plunge. Pundits usually seem fixated on telling us either how bad the market is or when an up market might be ready for a correction. Fear of a correction exists because corrections truly are always just around the corner. Markets never move in a straight upward slope. Stock charts look like an outline of a mountainous horizon off in the distance, peaks followed by troughs running into more peaks. Fortunately, for most investors, despite the ups and downs, market prices rise over longer periods of time – just not as smoothly as we would all hope.  So, how should investors time their entry into the market?  First, consider your goals for the savings you are considering investing. Most investors have long-term goals like saving for college and retirement. If that’s the case, then timing the market has very little effect over what could be potentially a few decades of savings and market cycles. Most experienced

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An Islamic perspective on short selling

“Sell not what you do not own.” – Prophet Muhammad (peace be upon him) We have been fielding some questions from clients regarding GameStop and other extreme market action in recent weeks. Here’s our list of frequently asked questions on the subject. It’s designed to help our clients through these strange times. Azzad’s portfolio managers do not have exposure to GameStop or other names that have been influenced by coordinated moves from retail investors. As you might expect, the small size of those stocks and their generally lower quality do not make them likely candidates for ownership. It isn’t GameStop’s meteoric rise (and subsequent decline) that we want to focus on, though. It’s the target of those retail investors who used social media to bid up prices and hammer Wall Street traders: hedge funds. Specifically, let’s address short selling, the strategy hedge funds used to make money from names like GameStop before retail investors decided to push back. At Azzad, we do not allow short selling by our portfolio managers, in keeping with the principles of Islamic finance and investing. Short selling is frowned upon by our scholars, some of whom liken the practice to gambling or speculating. Basically, short

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Azzad participates in 17th annual AAOIFI conference

  Azzad Asset Management joined senior officials, scholars, and industry leaders in Manama, Kingdom of Bahrain, for an international conference on setting the rules of the Islamic economy organized by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Held under the auspices of the Central Bank of Bahrain, the April event featured 33 experts from 16 countries. AAOIFI member and Azzad President and CEO Bashar Qasem, CSAA, attended the conference on behalf of the company. Azzad is an outspoken advocate of the Seven Tenets of Halal Investing, which incorporate AAOIFI guidelines on investing, purification, and zakah. Mr. Qasem is one of the few Islamic finance professionals in the United States to have earned the Certified Shariah Adviser and Auditor (CSAA) credential from AAOIFI. AAOIFI has established itself as the leading standard-setting body for the Islamic finance industry since its founding 28 years ago. Through the issuance of its official guidelines, the organization has created an agreed-upon set of rules for the global Islamic economy. The 17th annual AAOIFI Shariah Boards Conference was convened to tackle the practical application of Islamic financial standards in the global economy. It included sessions whose focus ranged from expanding the current Shariah regulatory regime to sukuk listing in global

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Halal investing 101: A refresher to remind yourself of the basics

We all need a reminder every now and then about how halal investing works. In a nutshell, halal investing touches on the following four issue areas: Refraining from the giving and taking of riba Avoiding speculation (gharar) and uncertainty (maysir) Not transacting in the buying and selling of debt Abstaining from investing in companies with unethical lines of business Together, those four areas, derived from the Qur’an and Sunnah, are the primary rules of halal investing. Remember and use them to judge the soundness of your financial transactions. Often, that means referring your situation to a scholar with the appropriate training to determine the Islamic validity of contracts. The DIY (do it yourself) approaching to investing is full of problems, most of which I have seen firsthand. This brings us to the “who” of halal investing. Just as you would go to a lawyer to get an important contract review, so too should you go to a specialist when it comes to your financial affairs. Even if you don’t have a personal scholar you lean on for such things, there are individuals out there who are accredited and able to share the fruits of their jurisprudence. For many, that means

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Socially responsible investment firm announces independent Islamic audit

(Falls Church, Virginia, 8/4/15) — Azzad Asset Management today announced the successful completion of an independent, external Shari’ah audit and verification of its policies and procedures. Azzad is the first investment firm in the United States to obtain such a verification. Conducted by the UK-based Islamic Finance Advisory and Assurance Services (IFAAS), a leading specialist in Islamic finance, the audit first evaluated Azzad’s Ethical and Shari’ah Investment Guidelines, which follow criteria set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the standard-setting body for the Islamic finance industry. IFAAS’s AAOIFI-certified Shari’ah auditors also evaluated the effectiveness of Azzad’s internal Shari’ah verification procedures and tested the company’s 2014 transactions to assess their compliance with Shari’ah principles. They also examined how Azzad calculates purification and Zakah for clients. Najib Al Aswad, IFAAS Senior Manager, said: “The Islamic finance industry is heading towards higher degrees of Shari’ah governance with an increasing number of markets introducing independent external Shari’ah audits as a mandatory requirement. Azzad’s management decided to implement this best practice on a voluntary basis to provide a further layer of assurance to Azzad’s clients and its Shari’ah Advisory Board. We are pleased to see that Azzad is conducting its

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New white paper outlines performance of Islamic investment strategies

(Falls Church, Virginia, 9/16/14) – Azzad Asset Management today announced the release of a white paper detailing the impact of halal investing guidelines on investment performance. Examining historical data over the last two decades, the white paper offers evidence that Shari’ah-screened indices, which favor industries like information technology and health care and exclude financial services, can outperform their broad-based conventional counterparts over the long term. “We are often asked how Islamic investment criteria might affect portfolio performance,” said Azzad investment advisor and co-author Omar Ezz, CFP®. “This research sheds some light on that subject. We think stakeholders and interested parties alike will appreciate our findings.” In addition to comparing long-term results that demonstrate the favorability of Shari’ah portfolios, the paper also shows that the most significant divergence between conventional and Shari’ah-screened indices is the almost complete lack of financials in the latter due to the Islamic prohibition on interest. Financial services is the top asset class in conventional indices, both in the United States and globally. Azzad’s findings follow other research indicating that socially responsible investing strategies can deliver competitive risk-adjusted returns over the long run. A 2012 study by Deutsche Bank found that incorporating environmental, social, and governance data

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Purification calculator helps investors avoid unethical profits

(Falls Church, Virginia, 8/13/14) – Azzad Asset Management today announced the launch of an online tool intended to help American Muslims observe halal investing guidelines. Using input provided by shareholders of the Azzad Mutual Funds, an online purification calculator will provide a user-specific dollar amount that represents unintentional earnings that were potentially derived from religiously impermissible sources (e.g., interest income). Purification totals are calculated on a per share basis using Azzad’s methodology for calculating unethical income. Azzad advises shareholders to give the indicated amounts to the charity or charities of their choice in order to avoid profiting from any activities deemed potentially harmful to society. Clients may think of their donations as akin to the practice of purchasing carbon offsets to alleviate environmental harm. Azzad already maintains daily records for all Fund accounts, batch data downloads, and point-in-time purification calculations in order to report purification totals on an annual basis to wealth management clients. As in previous years, the firm released annual totals to clients this year during the holy month of Ramadan (early July). Azzad’s new calculator allows shareholders to access their totals at any time, year-round. The online tool will also be useful to shareholders who own the

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