AmanahNZ - Ethical Mandate

AmanahNZ applies an Ethical Mandate which is defined in its Trust Deed and Statement of Investment Policy and Objectives. The Ethical Mandate states the types of investing activities allowed and the ethical screening criteria applied in the selection and monitoring of investments.

Our Ethical Mandate:

• provides for socially responsible/ethical investment policies;

• requires all investments to comply with the rules on permitted business activities and business financial requirements defined by the AAOIFI Shari’ah standards; and

• is mandated by hundreds of years of scholarly discussion by Clerics of Islam, Christianity and Judaism. The AAOIFI Shari’ah standards have been adopted as they provide an “auditable” mandate based on serious scholarly debate and reasoning.

The Scheme adopts the AAOFI rules and combines them with the best Western practices we consider available, whilst remaining strictly compliant with the Ethical Mandate.

The key difference between this Scheme and other “ethical” offerings is that our Ethical Mandate has a solid scholarly basis in history of putting people before profit and prohibiting the underpinning of Western investment – interest-based financial products including moneylending and leverage.

 

ABOUT OUR ETHICAL MANDATE

We believe that the AAOIFI standards promote investments which seek to consider both financial return and social good. We believe AmanahNZ advances a strong ethical statement and make it an appropriate investment vehicle not only for persons who abide by similar religious principles, but also for those who ethically value these investment ideals.

Our Ethical Mandate is as follows:

Equity Investments

Our Ethical Mandate means that all equity investments by AmanahNZ must be in companies with strong balance sheets showing:

• Interest-bearing debt less than 30%;

• Interest-bearing investments less than 30%; and

• Illiquid assets greater than 33% (i.e. there are assets making or doing something for the good of man kind that exceed 67% of total assets).

Explanation: a company must have low-debt and highasset ratios, with a strong balance sheet, often referred to as “Blue Chip” stock.

All investments are prohibited from the following activities:

• Money lending (i.e. this includes all financial institutions e.g. Banks lend money using interest based concepts)

• Gambling and speculative investments  (this excludes high-risk investment products)

• Derivatives (i.e. a high-risk product that, in our opinion, is considered unethical gambling)

• Alcohol

• Tobacco

• Weapons of war

• Adult entertainment

• Pork • Leverage (i.e. borrowing against investors (your) money, not assets)

Explanation of leverage: Leverage is a practice of many fund managers. In our opinion, leverage puts your investment at an unethical risk. We strongly disagree with the use of leverage.

Additionally, hedging instruments cannot be used to manage currency risk as they are derivatives and therefore are prohibited by the Ethical Mandate.

Cash

No interest is received for assets held in the Scheme’s bank accounts, as the Manager has elected that these bank accounts are non-interest bearing.

AUTHORISED INVESTMENTS

AmanahNZ may only hold “Authorised Investments”; this is currently defined as the stocks of up to 50 corporations listed on the approved stock exchanges (NYSE, NYSE MKT LLC or NASDAQ), or cash (which shall be US dollars). All investments must comply with the Ethical Mandate.

 

ADVISORY BOARD

The Amanah Ethical Advisory Board is responsible for reviewing the Ethical Mandate compliance of AmanahNZ and its investments. The Advisory Board reviews compliance with the Ethical Mandate but does not undertake investment selection. The current members of the Advisory Board can be viewed here.

 

PURIFICATION

AmanahNZ monitors the compliance of the investments on a daily basis with the assistance of IdealRatings to ensure they remain compliant. If an investment breaches the Ethical Mandate it is sold at the first reasonable opportunity. This Ethical Mandate ensures compliance with the AAOIFI standards.

Where investments unwittingly breach the strict Ethical Mandate, AmanahNZ, under the AAOIFI standards, may make a payment to a recognised charity of the sum that infringed the Ethical Mandate in order to purify the breach.