First Sharia compliant KiwiSaver Scheme coming

Craig Simpson

New Zealand has long lacked an investment vehicle that meets the ethical needs of the Islamic community.

After two years of hard work and consultation with the Financial Markets Authority as well as various Islamic academics and leaders, ‘Amanah Ethical’ is officially launching New Zealand’s first ethical and socially responsible and strictly Sharia compliant KiwiSaver Scheme on January 31, 2015.

Amanah Ethical is the result of Auckland barrister, Brian Henry recognising that there was a significant and valuable part of the New Zealand community, who, for religious reasons, were not able to actively participate in the KiwiSaver retirement savings programme.

KiwiSaver is recognised as a valuable mechanism for helping New Zealanders save for their retirement.

Kiwi Ownership

The Company responsible for launching the ‘Amanah KiwiSaver Plan’ and the ‘Amanah Unit Trust’ is based in Auckland and more importantly, New Zealand owned and operated.

Amanah is committed to serving the needs of the Islamic community in New Zealand and has partnered with the Federation of Islamic Associations of New Zealand (FIANZ).

Amanah and FIANZ signed an agreement on November 14, 2014 to promote the ‘KiwiSaver Fund’ together and the latter has become a part owner of the KiwiSaver business and acts as consultants on the constitution of the Islamic Advisory Board.

Strict compliance

Amanah Ethical is committed to ensuring that the Fund adheres to the strict rules associated with Sharia law. To ensure this process, the Company has an Islamic Advisory Board, consisting of local and international Islamic scholars and academics.

The Islamic Advisory Board ensures Amanah is strictly Sharia compliant.

Major financial principles which are adhered to include a ban on interest; a ban on uncertainty; adherence to risk-sharing and profit-sharing; promotion of ethical investments that enhance society and do not violate practices banned in the Holy Quran.

Valued Principles

Mr Henry sees the application of Islamic Financial principles as being a series of pragmatic and conservative investment principles. As a result of this conservative approach, the companies held in the portfolio are generally considered to have less risk than those found in mainstream share portfolios.

All investments included in the portfolio are approved as being Sharia compliant in accordance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards.

The Islamic Advisory board is assisted by the use of third party proprietary screening software provided by IdealRatings Inc, a US based Islamic financial screening service.

The AAOIFI standards are recognised and accepted in all Islamic states as being Sharia compliant. The investment mandate restricts the number of corporations held in the portfolio at any one time to 50.

Cash is also held in the portfolio for liquidity and risk management from time to time.

Security of the investments and assets held in the fund is paramount, which Amanah takes seriously. All shares and/or cash are held by ‘Trustees Executors Limited,’ an independent Trustee. It is the Trustees’ role to act as advocates for investors and continually supervise and monitor the activities of the Fund.

The Trustee ensures that the Funds are invested in accordance with the investment mandate and Amanah cannot move securities (or cash) outside of the portfolio without first gaining authorisation from the Trustee in writing.

Craig Simpson is Investment Strategist for AmanahNZ KiwiSaver and a Senior Analyst at interest.co.nz. For further information, please visit www.amanahnz.com

 

Brian Henry, Managing Director of Amanah New Zealand (left) and Dr Anwar Ghani, President, Federation of Islamic Associations of New Zealand signing the Agreement

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