Saturna Capital to launch actively managed Islamic global equity ETF with ESG characteristics; as HANetf CEO predicts big rise in active ETFs in Europe

  • Saturna Capital and HANetf partner for second ETF to launch new actively managed Islamic ETF with ESG focus
  • Saturna Al-Kawthar Global Focused Equity UCITS ETF (Ticker: AMAL) aims to achieve long-term capital appreciation and will comply with the principles of Islamic investing
  • Saturna Capital has 31 years of Islamic investing experience is largest US manager of Islamic compliant assets [1]
  • CEO of HANetf says actively managed ETFs are on the rise in Europe and are the next frontier for the European ETF market

25th November 2021 London

Saturna Capital and HANetf have today announced the launch of an actively managed global equity ETF focusing on Islamic-compliant stocks with positive ESG characteristics. The Saturna Al-Kawthar Global Focused Equity UCITS ETF (Ticker: AMAL) will launch via the HANetf platform and is listed on London Stock Exchange Borsa Italiana and XETRA.

The Shariah ETF aims to achieve long-term capital appreciation. The ETF complies with the principles of Islamic investing and will integrate ESG scoring into its evaluation of the investments it makes. Managing the AMAL ETF will be the highly experienced team from Saturna Capital Corporation a $6 billion asset management firm based in Bellingham Washington US that has managed Islamic and socially responsible investment strategies for over three decades. Saturna Capital is one of the largest managers of Islamic-compliant assets in the United States. [2]

Jane Carten President of Saturna Capital said “For several years investors from outside the US have asked how they could access our investment strategies and we are excited to have this opportunity to offer an Islamic UCITs ETF to those investors.”

AMAL will follow a similar investment philosophy and approach as the US-registered Amana Growth (AMAGX) Amana Income (AMANX) and Amana Developing World (AMDWX) Funds which also incorporate Islamic and ESG guidelines. These funds were launched in 1989 1994 and 2009 respectively.

Saturna Capital and HANetf have already partnered earlier in 2021 to launch the Saturna Sustainable ESG Equity HANzero™ UCITS ETF (SESG) an actively managed sustainable ETF with a HANzero™ carbon offset that demonstrates active investing to reflect sustainable and ESG values. SESG is a carbon neutral investment as the carbon impact of the equity holdings is offset with carbon offsets through a product feature called HANzero™.

Scott Klimo CFA Chief Investment Officer of Saturna Capital says:“Saturna Capital believes including environmental social and governance (“ESG”) factors in an Islamic portfolio further reduces risk leading to more resilient portfolios and that companies proactively managing business risks related to ESG issues are more resilient and make better contributions to portfolios designed for patient investors. We are therefore delighted to launch the Saturna Al-Kawthar Global Focused Equity UCITS ETF (Ticker: AMAL) to investors looking for an actively managed ethical fund that invests globally and is benchmark agnostic in terms of geographic and industry allocations.”

Active ETFs get more active

Hector McNeil co-CEO of European ETF issuer says that over recent years the focus on ETF investing is starting to broaden outside of purely passive investing as ETF investors are increasingly demanding more types of investment strategies in the ETF wrapper.

US regulators have played a major role in the rise of active ETFs. When the Securities and Exchange Commission (SEC) -the US equivalent of the Financial Conduct Authority – changed its rules around two years ago to allow active ETFs to be issued active managers were then able to provide minimal holdings disclosure. This made them comfortable to issue ETFs which they had previously avoided because of the requirement to give full daily disclosure of holdings. This opened the floodgates to a new wave of active ETFs.

Independent research and consultancy firm ETFGI estimate assets and net inflows in Active ETFs worldwide were USD$418 billion and USD$110 billion respectively at the end of September 2021. [3] During September actively managed ETFs and ETPs saw net inflows of USD$14.68 billion bringing year-to-date net inflows to USD$109.93 billion. [4]

Active ETFs are building to be a major part of the ETF market but in Europe while active ETFs exist the market is still nascent.

Hector McNeil Co-CEO of HANetf said “Active ETFs are the next frontier for the European ETF market. Regulators have played a major role in the rise of active ETFs in the US and what happens in the US tends to follow here. Typically the US is two to three years ahead in AUM growth and product innovation. If this is the case then it’s only a matter of time before active ETFs become commonplace in Europe. Over the last two years active ETFs have gone from nowhere to being the main battleground for providers in the US and we expect that to follow suit to Europe.

It’s still early days for active ETFs but watch this space. My prediction is it will be the hottest growth area in two- or three-years’ time. However it will mean European regulators having to follow the SEC and allow flexibility to active managers around disclosure. That’s why we are delighted to announce the launch of the Saturna Al-Kawthar Global Focused Equity UCITS ETF (Ticker: AMAL) in partnership with Saturna Capital which will be Saturna’s second active ETF issued through HANetf.

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