Get this: Middle East emirate’s first fund of funds, which was launched at the beginning of 2009, beat comparable indexes by posting a 41% return last year without taking on any debt.Is that even possible?
According to the Wall Street Journal, yes.
A new fund of funds, Dubai Shariah Asset Management (DSAM), invests only in shariah-compliant strategies. That means DSAM Kauthar Commodity Fund’s portfolio managers (who are from BlackRock, Tocqueville Asset Management, Lucas Capital, and Zweig-DiMenna International Managers) avoid investing in companies engaged in “vices” like gambling or alcohol. So this fund is out.
Short selling is obviously out too. The PMs also shy away from firms that rely on interest revenue or that carry a lot of debt because it doesn’t comply with Islamic faith.
The fund is a partnership between a New Canaan, CT company, Shariah Capital and the PMs from BlackRock, Tocqueville, Lucas, and Zweig-DiMenna.
None of the PMs are allowed to take on any debt, which might be one reason why the fund is up only slightly more than 1% through March 28.
Adhering to all of those rules is simple thanks to sin-blasting technology created by Shariah Capital in New Canaan. The firm developed software to ensure that investment activities are shariah-compliant.
The minimum investment is $5 million. There must be a catch.
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