NEW YORK — Moazzam Ahmed tried for years to square his investment goals with the tenets of Islam.
“There was a lot of research that I had to do on my own,” he said, referring to the time he spent poring over potential investments to weed out objectionable businesses. “I probably still made mistakes.”
Then, several years ago, he discovered a mutual fund company that complied with Shariah, or Islamic law, and soon rolled over his 401(k) to the funds. The funds prohibit investments in companies whose business focus on alcohol, tobacco, gambling, pornography or insurance.
Ahmed hadn’t just found a family of funds that aligned with his religious principles, he’d discovered funds that produced strong returns and managed to sidestep the implosion of Enron Corp. and Worldcom Inc. as well as the more recent mortgage debacle.
While Wall Street puts much of its faith in money, there are funds guided by religious principles that can keep up with or even outperform many funds with fewer restrictions on how they invest.
Ahmed, a software developer in Kirkland, said his investment in the Amana funds, which are run by Saturna Capital Corp., meant he didn’t have to give up financial returns to follow his religion.
The Amana funds bar investments in companies that have large debts or that draw a sizable portion of their profit from earning interest. Not being able to invest in banks might seem like an onerous requirement given that financial services companies make up about a quarter of the benchmark Standard &Poor’s 500 index. But that’s been a welcome prohibition lately because so many financial companies are struggling with souring mortgage debt.
Monem Salam, director of Islamic investing and deputy portfolio manager for Saturna, said the funds’ conservatism has benefited its investors.
“We don’t buy any companies that are doing something that would be against the tenets of Islam,” he said.
The fund relies on a group of Islamic scholars to help determine what types of investments are acceptable.
“I think we have a good system of how we manage money. We also have one step more than any other ethical fund, which is that we also avoid the financial companies, which in this environment has really worked out,” Salam said.
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