FTX – Lessons Learned from a Lack of Due Diligence

What do a supermodel, Shark Tank star and sovereign wealth fund have in common? They all failed to ask questions before investing their money. The investments were related to the cryptocurrency exchange FTX and its trading arm affiliate, Alameda Research. Here are 4 factors you should consider before you invest in any potential investment. Conflicts of Interest Between Affiliated Entities The adage “follow the money” can help you identify potential conflicts of interest between entities. Conflicts of interest may sometimes be unavoidable. They aren’t always a bad thing. However, related party transactions should be disclosed. You should also understand how such conflicts are mitigated. Contrary to assurances that Alameda and FTX were separate entities, the two firms were intertwined. In fact, the collapse of FTX can be directly attributed to Alameda trading billions of dollars from FTX accounts and leveraging the exchange’s native token, FTT, as collateral. At the time, it would have been easy to press both companies for more information. Weak Governance and Poor Financial Controls A strong effective control environment reflects the values of an organization. A legitimate organization will have well-defined policies and procedures that govern its operations. Additionally, those controls will be overseen by an

January 11, 2023 No Comments

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

May 28, 2021 No Comments

Volatility strikes back

If you’re a little taken aback by the whipsaws in markets lately, you’re not alone. Though jarring, what we’re experiencing is a perfectly normal return to volatility following two years of unusually smooth sailing. The surprise was that markets ran ahead so far so fast without any appreciable pullback. Last year, we saw six of the seven lowest measures in volatility in history. Keeping your cool can be hard to do when the market goes on one of its more traditional roller-coaster rides. It’s useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are a few things to keep in mind: Have a game plan Having predetermined guidelines that recognize the potential for turbulent times can help prevent emotion from dictating your decisions. For example, you might take a core-and-satellite approach, combining the use of buy-and-hold principles for the bulk of your portfolio with tactical investing based on a shorter-term market outlook. You also can use diversification to try to offset the risks of certain holdings with those of others. Diversification may not ensure a profit or guarantee against a loss, but it can help you understand and balance your risk

February 8, 2018 No Comments

Azzad Ethical Fund becomes first halal enhanced index fund in U.S.

(Falls Church, VA, May 15, 2017) — Investment advisor Azzad Asset Management has announced a new investment strategy for its mid-cap growth Azzad Ethical Fund (ticker: ADJEX) that makes it the first halal mid-cap enhanced index fund in the United States. Launched in 2000, ADJEX is an ethically screened mid-cap growth mutual fund sub-advised by Chicago-based Ziegler Capital Management. Last month, Ziegler and Azzad implemented an adjusted investment strategy for the fund that increases the number of stocks in the fund and reduces its expected tracking error. “We still hold more of stocks we believe have the potential to outperform, but in smaller increments and with greater diversification,” said ADJEX Portfolio Manager Christian Greiner, CFA, of Ziegler Capital Management. “We believe this will result in lower day-to-day variation in the fund’s performance from the benchmark without sacrificing the potential to outperform the benchmark over time.” “We wanted the primary driver of the fund’s returns to be the firm’s ethical screening criteria rather than larger positions in individual stocks,” said Azzad Vice President Jamal Barmil. “An enhanced indexing strategy allows us to do that. As a result, the fund’s exposure is now spread across a larger number of ethically-screened stocks with

May 15, 2017 No Comments