Planner Fatima Iqbal says Muslim investors are energized to act with their money.
For clients of Azzad Asset Management in Falls Church, Va., the past few months have been trying, to say the least. The Trump administration’s two executive orders banning travelers from several Muslim-majority countries, not to mention the president’s long history of anti-Muslim rhetoric, have rattled nerves among the firm’s primarily Muslim clientele. The silver lining, says senior investment advisor Fatima Iqbal, is that investors are energized, and they want to speak with their actions and their money.
“People are searching for ways where they can make their voices heard,” says Iqbal, who is based in Chicago. “Now, they realize they have voices sitting in their financial portfolios.”
Working with a board of Islamic scholars, Azzad developed screens to filter out investments that go against Islamic law, or Shariah. The firm also takes public stands on environmental and social issues through shareholder resolutions. It urges the companies it invests in to treat its workers well, be good environmental stewards, and hold governments accountable wherever they do business. For example, when U.S. Attorney General Jeff Sessions reversed an Obama-era order reducing the use of private prisons, Iqbal was quick to inform the firm’s clients that Azzad would not be buying the stocks of two publicly traded private prison companies, even though their fortunes suddenly looked brighter. “Private prisons are wrong at any price,” she wrote.
Giving Muslims More Options
At 3.3 million, Muslims make up only 1% of the U.S. population, but this number is expected to double by 2050. The community’s income is in line with the general population’s and growing.
When Azzad launched in 1999, the firm recognized that Muslims had few options to invest within the bounds of Shariah, including prohibitions on alcohol, tobacco, gambling, weapons, pornography, and usury. To address this need, Azzad launched the Ethical Fund
“When my parents were trying to invest years ago, there weren’t any of these options,” says Iqbal, 34. “They would tell their broker, ‘Don’t buy any alcohol or tobacco,’ and just did the best they could, but they were never sure that their investments were pure.”
More observant adherents of Islam sat on the sidelines, Iqbal says. One solution adopted by many Muslims was to keep their money in checking accounts, because unlike savings accounts, they do not earn interest, or riba, which is prohibited by Shariah. “I’ve had clients who before they came to us would have five checking accounts, and they were using them as savings accounts,” Iqbal says. Other investors opted for socially responsible funds because they were the closest thing to Shariah-compliant investments. And some chose not to participate in 401(k)s altogether, even if that meant forgoing their company’s match.
Since those early days, Azzad, which has $373 million under management, has steadily built a full portfolio solution. In 2007, the firm began to introduce investment styles to supplement the Ethical Fund. It now has eight model portfolios across market caps and investment styles through a wrap program, which are managed by subadvisors. The outside managers, who have expertise in their investment style, follow Azzad’s screens.