16Feb

Hejaz brings Islamic mortgage to market

February 16, 2021 Ali Ozyon 61

Sharia-compliant financial company Hejaz Financial Services has spent the past year trialling an Islamic mortgage product – the first in the local market – and is close to finalising plans to offer the loan through a mortgage broker.

Hejaz is a diversified group, offering superannuation, investment funds, financial and estate planning and, more recently, mortgages.

The company was started in 2013 and its compliance with sharia law is certified by Global Islamic Financial Services, a South African-based sharia audit, advisory, tax and accounting firm.

Hejaz has been getting around 150 applications for home loans a month from existing clients since it rolled out the product in the middle of last year.

Hejaz chief operating officer Muzzammil Dhedhy said the growth potential is enormous once the product gets onto broker panels (the group Hejaz is working with has not been disclosed).

He said there are around 1.2 million Muslims living in Australia and only an estimated 30,000 to 40,000 use the services of the handful of Islamic financial services providers here.

“Access has been the problem,” he said.

Dhedhy said Hejaz has an Australian Financial Services Licence and all its products are compliant with APRA and ASIC rules. “Sharia is complementary,” he said.

Sharia loans have a different style of contract. It is a facility where equity in the property is shared and the customer buys the financier’s share over time, paying rent along the way.

“The paperwork is different but the loan aligns with standard Australian credit practice,” Dhedhy said.

All products have to be certified sharia. In the case of loans this means they have to be funded from sources that are also sharia-compliant. Funding for the Hejaz loan comes from one of its own investment products.

According to Global Islamic Financial Services’ Guide to Islamic Finance: “Islamic economic activity is regulated by divine injunctions prohibiting interest, speculative behaviour, obscurity, market monopolisation, gambling and trading in unlawful or prohibited commodities and services.”

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29Nov

Islamic fund eyes Coast’s Halal tourism future

November 29, 2019 Ali Ozyon 58

An Islamic fund manager will invest $30 million on the Gold Coast on tourism assets that reflect Muslim cultural values.

Millions of dollars will be invested by an Islamic fund on the Gold Coast to create resorts and accommodation that cater for Muslim tourists.

AN Islamic financial services company will invest millions in the booming Halal tourism sector in Queensland over the next three years with the focus on the Gold Coast. The Melbourne-based Hejaz Financial Services managed diversified Global Ethical Fund aims to spend an initial $30 million in Queensland.

The fund will focus on either new tourism developments or on capital works on existing accommodation sites that will conform to Islamic values in a family cultural context.

This would mean resorts would have access to prayer rooms, offer activities that are exempt from gambling and drinking and provide a range of Halal-friendly restaurants and dining options.

Overseas there are Muslim focused resorts which also feature calls to prayers, separate men and women’s swimming pools and other segregated activities. Queensland tourism surges ahead of biggest rivals

Hejaz Financial Services chief operating officer Muzzammil Dhedhy said Queensland and especially the Gold Coast was appealing to Muslim holiday makers. “We have no property in Queensland as yet but we intend to invest $30 million into Australian Halal tourism infrastructure over the next three years,” he said.” We would look at the Gold Coast because if its weather and geography and we would be focusing on properties of 30 to 40 rooms give or take.

“Our fund is Australia’s strongest performing Islamic investment fund and is growing 100 per cent year-on-year so there will most definitely be more opportunities for greater investment into Halal tourism infrastructure.”

Latest research found the current commercial value of the global Halal tourism market was about $300 billion buoyed by a growing Muslim middle class mostly from the middle-east and south-east Asian countries.

According to Hejaz Australia currently only has as small stake in the growing market.

“Lets say a couple from Dubai want to go on a honeymoon, Australia probably doesn’t come up on the radar,” Mr
Dhedhy said.

“But Halal tourism is growing and we see an opportunity because it satisfies a requirement through our fund but also it provides an outstanding opportunity to participate in the Australian economy as well.”

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23Oct

Low-debt companies driving returns for ESG investors

October 23, 2019 hejazfs 64

Avoiding investment in highly leveraged ASX-listed companies can lead to stronger returns, according to a study by environmental, social and governance (ESG) and Islamic fund manager Hejaz Financial Services.

Their recent analysis showed that over one year, the total return (weighted average) for companies with a debt/market capitalisation ratio less than 30% was 14.92%, which was three times that of companies with ratios of 30% or higher.

Over a period of three years, companies with relatively low debt/market cap ratios returned 25.35% (weighted average), compared to 8.89% for the rest of the market.

Over five years, low-debt companies more than doubled the investment return (on weighted average) of more highly geared stocks.

The sectors most likely to include highly-leveraged companies were financials, real estate and utilities, with IT and healthcare companies carrying debt/market cap ratios of less than 30%.

Hakan Ozyon, Hejaz’s senior portfolio manager and chief executive, said that approach helped deliver consistent returns for clients and help outperform ‘mainstream’ ESG funds.

“By taking a values-based approach to investing which, for Hejaz, involves excluding highly leveraged companies, we’ve delivered a gross return of 9.37% per annum since inception,” Ozyon said.

“With interest rates reaching record lows and debt being cheaper than ever, we’ve seen a sharp rise in management’s comfort with taking on greater levels of debt.”

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19Oct

Why more non-Muslims are choosing Islamic super funds in Australia

October 19, 2019 hejazfs 65

Islamic superannuation funds in Australia are emerging as competitors to the major players in the growing finance and investment sector. Contributing to their growth is an influx of non-Muslim investors.

After two years of investing his retirement money in one of Australia’s major superannuation funds, Mohamed Mahmoud decided to make a switch.

The 35-year-old computer science engineer, who immigrated to Australia from Egypt four years ago, said his decision was driven by a desire to invest in a fund that was more aligned with his cultural values and principles.

“I was looking for an Islamic [super fund] because I know that most of the super funds here in Australia maybe invest in gambling, banks or arms manufacturers, which I believe is unethical.”

A year ago, he transferred his money to a ‘Sharia-compliant’ superannuation fund, which are governed by Islamic principles and considered a type of “socially responsible” form of investing.

He also persuaded his wife to put her money in the same fund. Their switch is proving to be popular routes as Islamic funds continue to grow internationally.

The Australian landscape
Australian superannuation funds are among the largest investment funds in the world, managing around $2.9 trillion, according to June figures by the Association of Superannuation Funds of Australia (ASFA).

Australia’s superannuation funds are expected to grow by 170 per cent over the next 10 years to $6 trillion.

Consequently, competition is growing among funds to attract new customers, and recently, Sharia-compliant funds have emerged as worthy competitors.

Market share and non-Muslim investment

Islamic fund Hejaz Financial Services has been growing in size since it began operating in 2014.

In 2015, the fund managed 143 customers, before growing to 1323 by 2017. The fund currently manages the funds of more than 4000 people, an amount in the range of $155 million.

Hejaz operations manager Muzzammil Dhedhy said the fund’s growth can be attributed to many factors, including increased awareness and the uncovering of superannuation abuses during the Royal Commission into the banking sector.

“In the past, no one knew where their investments were going, and whether their investments went to the arms industry or to cigarette companies,” he said.

“Many Muslims and non-Muslims said they did not want to be associated with these [abuses].

“10, 20 and 30 years ago, people may not have been aware of the fact that if for example my super was being invested into a company that indirectly supported the military, or indirectly supported tobacco, or gambling or whatever.

“A lot of Muslims and non-Muslims were shaken up by that. They say ‘how can you engage in such practices, and how can I even support you engaging in such socially unacceptable practices.”

More than two-thirds of subscribers in Hejaz’s superannuation savings fund, called the Global Ethical Fund, were male, and with an average age of 35. Furthermore, 25 per cent were non-Muslims.

Mr Dhedhy said the fund was able to attract such a high number of non-Muslim customers due to its ability to “distribute its investments well and ethically”.

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19Sep

Hejaz climbs Islamic fund ladder

September 19, 2019 hejazfs 54

Hejaz Financial Services announced its flagship fund, the Global Ethical Fund, has outperformed Australia’s other Islamic investment funds during FY19.

It achieved gross returns of 6.82% per annum, while Crescent Wealth generated 4.56% per annum.

The Sharia-compliant fund invests across multiple asset classes including domestic and global equities, property, infrastructure and fixed income assets.

In line with Sharia principles, its portfolio excludes banks, pig products, alcohol, media, weaponry, tobacco and gambling, making the screening process more stringent than traditional ESG investments, it said.

Companies it invests in must have debt-to-market-cap ratio debt below 30%, and tangible assets above 50%.

Senior portfolio manager and chief executive Hakan Ozyon said the strong results were due to the fund’s global exposure and the hyperactive approach to portfolio management.

More than a quarter of the fund’s investments are in overseas markets, with about 55% of those in the US, predominantly in IT, healthcare and FMCG sectors, he said.

“Our highly active approach matches economic cycles to geographies, and is tailored for each market and each sector.”

Ozyon projected Hejaz Financial Services will expand despite a global volatile market, expecting funds under management – currently at $60 million – to double in the next 12 months.

“Our track record of strong results, growing investor interest, and increasing market demand for Islamic investment products – reflective of Muslim population growth in Australia – gives us confidence that we will meet our growth targets for the new fiscal year.”

Hejaz also provides Islamic compliant financial advice, accounting, estate planning and tax services.

The company is set to expand their offering in the next 12 months to include real estate, insurance and legal services.

According to a report by the Malaysia Islamic International Financial Centre, total global Islamic assets under management were US$70.8 billion at the end of the first quarter of 2017, up from US$47 billion in 2008.

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05Sep

Hejaz posts leading results for FY18-19

September 5, 2019 hejazfs 54

Hejaz Financial Services has released results for FY18-19, showing a gross return of 6.82 per cent for its Hejaz’s Global Ethical Fund.

The fund was Sharia-compliant and invested across multiple asset classes including domestic and global equities, property, infrastructure and fixed income assets.

It had a more stringent screening process than other environmental, social and governance (ESG) funds, as the portfolio excluded banks, pig products, alcohol, media, weaponry, tobacco and gambling.

“If a client requires certain religious overlays or certain social overlays it’s a duty of ours, not just as investment managers but also financial planners, with what they require,” Ozyon said.

“We think we are a disrupting fund manager and we have a lot of demand around the world for our price at this stage.”

In addition to its fund, Hejaz said it also offered other financial services, including financial advice, accounting, estate planning and tax, all geared towards the Muslim population and were set to expand their offerings in the next 12 months to include real estate, insurance and legal services.

For the financial year 2018/19, the fund returned 6.8 per cent. It aimed to achieve CPI plus three per cent (before fees) per annum and targeted investors with a medium to long-term time horizon.

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29Jun

Australia to add another Islamic superannuation fund to its mix

June 29, 2017 hejazfs 46

AUSTRALIA: One of the world’s largest holders of pension fund assets will soon offer its Muslim minority and fast-growing ethically-conscious investing community yet another option to invest in a retirement fund that meets both Islamic obligations and socially responsible investing (SRI) principles, lending strength to its relatively nascent Islamic superannuation fund industry.

Australia’s Hejaz Financial Services (Hejaz FS) will roll out the Global Ethical Fund, its first fund, offering retail investors exposure to Australian equities, international equities, REITs, Sukuk, gold and Islamic term deposits in a Shariah compliant manner. Hejaz will join the few in the market –Crescent Wealth and First Guardian – in providing an Islamic retirement fund to the underserved Australian Muslim population.

“It is a balanced diversified global fund with the aim of investing in a balanced way allowing consistent returns,” Sheikh Muzzammil Dhedhy, COO of Hejaz FS, tells IFN. “The fund targets an average return of 7-10% and we hope to perform higher than that.” The investment universe of the fund will be screened for Shariah compliance and constructed in accordance with AAOIFI guidelines by San Francisco-based IdealRatings.

Despite being the fourth-largest pension fund market in the world at US$2.2 trillion in superannuation assets as at the end of 2016, Australia’s Islamic pension fund segment accounts for less than 1% of the overall market – unsurprising considering that the country has a small Muslim population (fewer than 480,000, or 2.2% of the population according to 2011 census). However, demand, according to market participants, is growing: Crescent Wealth, the first to foray into the domestic Islamic superannuation realm, crossed the AU$100 million (US$74.54 million) mark in 2015 after launching in 2013. Hejaz FS itself decided to take the superannuation fund route to better cope with demand.

“Prior to the global ethical fund, we constructed bespoke portfolios allowing us to offer Shariah compliant financial services but it wasn’t very scalable – this was feasible for a few hundred customers but with [the] thousands of customers that we have now, it becomes difficult to manage on an individual portfolio basis – so we opted to structure a mandate fund,” Muzzammil explains.

And fund managers are not only seeing take-up from the Muslim community, but also from non-Muslims who prefer to invest in an ethical manner. Muzzammil confirms that it is seeing increasing interest from non-Muslims in its Shariah compliant offerings as they hunt for good returns on ethical investments – about 10% of its clients are non-Muslims. Australians are moving rapidly toward the SRI: core responsible investment funds leaped 60% to AU$51.5 billion (US$38.39 billion) in assets under management, doubling in two years, according to the Responsible Investment Benchmark Report 2016.

Hejaz FS will feed AU$25 million (US$18.64 million) from its bespoke individual portfolios into the Global Ethical Fund. It projects the fund to hit AU$1 billion (US$745.44 million) in eight years’ time, and plans to expand its product suite as well as geographical presence.

“The Global Ethical Fund is the first of a series of funds and products that we will be launching in the next 24 months,” revealed CEO Hakan Ozyon, adding that: “We have set our sights firmly on expansion beyond Australian shores, into the Asia Pacific and beyond.”