A Hedge Fund That Can't Invest In Any Vices That Aren't Compliant With Shariah Killed It Last Year

Who wants to be long Playboy now anyway?

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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