Active Global Equity Shariah ETF Report | November 2024

Shariah Active ETF Key Takeaways

Politics have obviously taken center stage with the November 5th US presidential election. While we are writing prior to the election, recent history indicates a reasonable chance that the winner may not be known for some time after. With major differences between the candidates on issues as diverse as renewable energy, support for domestic semiconductor production, taxation and, of course, tariffs the result will be impactful if not yet visible. Also of importance will be the legislative tally and control of the House of Representatives and Senate. Either candidate’s policy preferences would be blunted by a divided government.
In October, the Shariah Active ETF declined -3.48%, roughly in line with Islamic indexes but lagging conventional global benchmarks. October returns were looking more buoyant until the final trading day of the month when indexes, led by technology, fell significantly. Regardless, our technology selections were more resilient than the benchmarks and demonstrated positive selection due to positive returns from Nvidia, ServiceNow and TSMC. Healthcare was the largest detractor from fund returns as the majority of positions lost ground, led by US HMO Elevance and German health specialty firm Siemens Healthineers. Communication services was the only sector to register a positive return, led by Alphabet. Stock selection was also positive in Consumer Discretionary as Lululemon demonstrated signs of recovery and rebounded.

The most significant divergence with Islamic indices

We have often commented on the large weight held by fossil fuels in typical global Islamic Indices. As of the latest monthly factsheet, energy accounts for 12.44% of the MSCI World Islamic Index. The strong performance of technology over the past two years, combined with a relatively moribund energy performance has pulled down that number from considerably higher levels in the wake of the Russian invasion of Ukraine. The changes in the oil price since early 2022 illustrate the dominate characteristic of oil – it is purely cyclical, failing to demonstrate any secular trend. In today’s dollars the price of oil is roughly the same as it was nearly 20 years ago in 2005, meaning that its real price today stands substantially lower. Meanwhile, the cost of extracting, transporting and refining oil continues to rise, with obvious implications for energy company earnings. Volumes of increased by economies of scale are hard to come by once you’re the size of Exxon or Saudi Aramco.
All that said, what can we expect for oil prices going forward? Economic conditions point to continuing demand weakness. The recent rate cuts and weak job numbers out of the US indicate an economy that has peaked for the time being.
Meanwhile, the Chinese government has been coy regarding potential stimulus, undermining any case for a rebound there. Europe remains moribund. The early November OPEC decision to delay raising production until the end of the year demonstrates concern over the supply demand balance. Conflict in the Middle East remains a wild card but, to date, has little effect on prices. It seems reasonable to assume that avoiding energy will not present performance challenges for the time being.
Source of all performance data: HANetf / Bloomberg as of 31.10.2024. Additional sources available upon request. Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.

Shariah Active ETF Performance Table

As of 31/10/2024

AMAL (Fund)
1M2.99%
3M-0.21%
6M6.42%
YTD11.54%
12M16.65%
3Y59.20%
Since Inception (28/09/2020)55.12%


Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/10/2024. Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

For more information, visit the webpage for our Shariah Active ETF

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