SPUS provides exposure to S&P 500 companies that meet strict screening requirements, including low leverage and debt-to-equity ratios; SPSK provides exposure to sukuk, Islamic financial certificates with unique risk profiles
SP Funds approach is geared towards advisors with clients focused on faith-based investing, others who are seeking unique socially responsible and ethical investing solutions
Bellevue, WA, Dec. 30, 2019 (GLOBE NEWSWIRE) -- SP Funds, a boutique asset management firm specializing in socially responsible and halal investing, has launched the first family of Sharia-compliant equity and fixed income ETFs.
Initially made up two funds, SP Funds’ ETF family is designed to provide investors of all types with exposures that can help diversify both equity and fixed income portfolios and help investors avoid the types of over-levered companies that may be particularly susceptible to volatile performance during a market downturn.
The SP Funds S&P 500 Sharia Industry Exclusions ETF (ticker: SPUS), which launched on the New York Stock Exchange on December 18th, tracks the S&P 500 Sharia Industry Exclusions Index, which is designed to provide value-conscious exposure to those S&P 500 companies that meet the guidelines of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The ETF and its underlying index use an exclusion methodology to arrive at the underlying portfolio. All of the following are removed from consideration:
- Alcohol
- Gambling
- Defense/Weapons
- Tobacco
- Adult Entertainment
- Pork Products
- Credit Cards
- Music, Cinema and Broadcasting
- Interest-Based Businesses
- Highly Leveraged Businesses
“We designed our initial equity ETF not only for investors who might be looking for halal exposure, but for any investor who looks at their portfolio through a value-focused lens as well as those who seek to avoid over-levered enterprises, which can encounter serious turbulence in choppy markets,” said Naushad Virji, CEO of SP Funds.
SP Funds has also launched a first-of-its-kind income-focused ETF, the SP Funds Dow Jones Global Sukuk ETF (ticker: SPSK). This fund is the first to provide targeted exposure to sukuks, which are financial certificates, similar to bonds, issued in the global markets and structured to comply with Islamic religious law and investment principles. Unlike conventional bonds, sukuks are based on a variety of contracts to create financial obligations and the returns to investors are considered to be profit sharing, not interest. At the end of 2018, global sukuk issuance stood at $123.2 billion up 5.5% from the previous year.1
SPSK seeks to track the performance, before fees and expenses, of the Dow Jones Sukuk Total Return (ex-Reinvestment) Index. The index is currently comprised of 85 constituents, all of which are investment grade and denominated in U.S. Dollars, representing investments in seven foreign countries, and had an average weighted maturity of 5.92 years. To be eligible for inclusion, sukuks must have an outstanding issue size of at least U.S. $200 million, a minimum time to maturity of one year, and a credit quality rating of at least BBB-/Baa# by S&P, Moody’s or Fitch Ratings.
“The global sukuk marketplace is very robust but to this point there had not been an ETF solution for investors looking to add this type of exposure to their income-focused portfolios. We’re very pleased to be first to market with this approach,” added Virji. “Not only is this a diversifier in terms of the underlying holdings in SPSK, but the fund is also designed to provide investors with decreased exposure to duration risk and interest rate risk, important considerations as investors are finding it ever more difficult to access yield from the traditional sources.”
SPUS has an expense ratio of 0.49% while SPSK has a gross expense ratio of 0.65%. SP Funds partnered with the team at Tidal ETF Services to bring these funds to market.
Additional information can be found at sp-funds.com.
1Source: International Islamic Financial Market (IIFM) in its Annual Sukuk Report 2019
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About SP Funds
SP Funds is dedicated to offering an ethical approach to investing that avoids companies with significant debt. By adhering to AAOIFI guidelines, we ensure the securities in our ETFs avoid investments in businesses such as tobacco, pornography, gambling and interest-based finance. The end result is a collection of socially responsible investments that are in well capitalized companies. For more information, visit sp-funds.com.
About Tidal ETF Services
Formed by ETF industry pioneers and thought leaders, Tidal sets out to disrupt the way ETFs have historically been developed, launched, marketed and sold. With a transparent, partnership approach, Tidal offers a comprehensive suite of services, proprietary tools, and methodologies designed to bring lasting ideas to market. As advocates for ETF innovation, Tidal helps institutions and organizations launch the most interesting and viable ETFs available today. For more information, visit tidaletfservices.com.
Before investing you should carefully consider each Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus. A prospectus may be obtained by visiting sp-funds.com or calling (425)409-9500. Please read the prospectus carefully before you invest.
As with all ETFs, Fund shares may be bought and sold in the secondary market at market prices. The market price normally should approximate the Fund’s net asset value per share (NAV), but the market price sometimes may be higher or lower than the NAV.
The Funds are new with a limited operating history.
Islamic religious law commonly known as Sharia has certain restrictions regarding finance and commercial activities permitted for Muslims, including interest restrictions and prohibited industries, which reduces the size of the overall universe in which the Fund can invest. The strategy to reduce the investable universe may limit investment opportunities and adversely affect the Fund’s performance, especially in comparison to a more diversified fund.
Equity securities, such as common stocks, are subject to market, economic and business risks that may cause their prices to fluctuate.
The strategy to reduce the investable universe may limit investment opportunities and adversely affect the Fund’s performance, especially in comparison to a more diversified fund. Investments in foreign securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Because no collateral is pledged as security for sukuk, purchasers of sukuk are subject to the risk that an issuer may not meet its payment obligations or that an underlying asset may not perform as expected or lose value. There may be times when the market is illiquid and it is difficult for the Fund to make an investment in or dispose of sukuk.
Diversification does not ensure a profit or protect against loss in declining markets.
Shares of the Fund are distributed by Foreside Fund Services, LLC.
Media Contact:
Chris Sullivan
MacMillan Communications
(212) 473-4442
chris@macmillancom.com