Four Fundamental Principles

The terms “ethical investing” and “socially responsible investing” are often used interchangeably. Other terms that you may hear include “mission investing” or “sustainable investing” or even simply “responsible investing.” All of these approaches are based on selecting investments from companies who make positive contributions to the world we live in, while avoiding certain practices that may damage quality of life. At Azzad, we employ these four principles:

  1. Screen for ethical and socially responsible companies you can respect.
    Most ethical investors would never consider operating a casino, owning a liquor store or profiting from military weapons. But, if you aren’t paying attention to the ultimate destination of your investments, you may be doing just that.
    We believe a sound investment considers the social and ethical consequences. That’s why we incorporate values into our investment management process. In addition to traditional financial and quantitative analysis, we exclude companies with significant revenues from alcohol, tobacco, meat, gambling, pornography, interest-based banking and the weapons industries as deemed by the Adviser. We define “significant revenue” as any company that earns more than 5% of its revenue from these industries. We also consider a company’s performance in respect to its environmental policies, corporate governance and human rights record.
    We also do not invest in companies whose debt ratios are greater than 30%. Companies must also comply with other financial ratios regarding their interest-bearing investments, debts and liquidity.
    Our screening process is highly disciplined and relies on our proprietary software so that our investment team stays focused on their fundamental analysis.
    Companies that successfully pass the above ethical investment screens are then submitted to our investment team for a rigorous financial analysis. Through a disciplined process, our managers identify promising companies to include in their portfolios.
    But our ethical screening doesn't stop once a portfolio is created. We periodically rescreen our investments for compliance. If we find a company is no longer compliant, it will be sold.
  2. Make your voice heard on corporate governance matters of importance through proxy voting.
    Our clients share the same goals all investors have - a comfortable retirement, a college education for their kids, and a way to grow their hard-earned money. But they also realize that the way they invest can shape the world we live in. We help make our voices heard by participating in proxy voting.
    Today, corporations make most decisions of consequence in our society. As the owner or shareholder of a stock or shares of a mutual fund, you are part owner of a corporation. That means you have both rights and responsibilities. You have the right to sit with management, be an insider and work for change.
    An important aspect of this shareholder activism is proxy voting. We typically vote on our holdings' proxies by mail. Our Funds' voting record is publicly available to you on Form N-PX. For a free copy, email us. We try to vote in harmony with our ethical investment philosophy. It's a philosophy that strives to protect our clients' financial interests as we incorporate cherished social and ethical values.
    To read our proxy voting guidelines click here.
  3. Strive for financial freedom for yourself and family.
    Our ethical investment philosophy considers the social consequences of investments within the context of rigorous financial analysis. We help you incorporate your values with your goal toward financial freedom. Our products reflect our belief that to strive financially, we must behave responsibly with our finances. That’s why we favor companies with low debt who engage in conservative financial practices.
  4. Leverage your generosity to benefit your favorite charitable causes for a brighter tomorrow.
    At Azzad we believe that charitable giving is an important pillar of ethical investing. As we build wealth for ourselves and our families, we believe in giving back to build a better world. Discover how you can give your wealth a mission with tax smart charitable giving. Whether you give through a donor advised fund, a trust or a foundation, we can show you how to stay in line with your ethical investment philosophy.
    For some investors, identifying unintended sources of investment income may be crucial. We'll help you identify those sources, calculate how much they are and recommend smart ways to give it away.

Socially Responsible Investing

A Proven Record

Over the past few decades, socially responsible investing (SRI) has grown faster than the broader universe of professionally managed investments in the United States.

Money invested in SRI strategies:

  • - Topped $3 trillion in 2010
  • - Grew more than 380% between 1995 and 2010. (During the same period, broader strategies grew only 260%.)
  • - Attracted nearly $1 of every $8 dollars under professional management in the US

Sound Investing

Academic research* continues to demonstrate that companies that practice good corporate policies often make sound investments. Further, studies show that by excluding companies that expose themselves to social and environmental risks, investors can contribute to their investment success.

*See www.sristudies.org

Source: 2010 Report on Socially Responsible Investing Trends in the United States