Amana Portfolio Allocation

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Nomadix
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Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 2:51 pm

Assume that I'm restricted to these 3 funds (just take it for granted, no use arguing why):

AMAGX
AMANX
AMDWX

What is the best allocation? (Currently 40/40/20).

Thanks.

mnvalue
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Re: Amana Portfolio Allocation

Postby mnvalue » Tue Jun 18, 2013 3:18 pm

Pick your desired portfolio AA, plug that allocation into Morningstar Instant X-Ray using Vanguard Total Stock / Total International / Total Bond. Then in another browser window of Instant X-Ray, adjust your allocation of those three funds until you get as close as you can. I'd focus on the domestic stocks / foreign stocks / bonds breakdown primarily. (I'm assuming that this is your entire portfolio. If you have other accounts, that changes the overall picture quite a bit.)

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mhc
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Re: Amana Portfolio Allocation

Postby mhc » Tue Jun 18, 2013 3:22 pm

I would probably go 0/80/20. The growth fund would just offer a growth tilt to the portfolio. Most around here would prefer to tilt to the value side.

It appears that these are the only 3 funds offered by Amana. Do you have plans for bonds or is that just out of the picture?

dbr
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Re: Amana Portfolio Allocation

Postby dbr » Tue Jun 18, 2013 3:26 pm

It is noted that only these are all stock funds except the third which holds 20% in cash (for now).

It would be a good idea to think about the stock/fixed income distribution and what to do if almost 100% stock is too risky.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 3:38 pm

mhc wrote:I would probably go 0/80/20. The growth fund would just offer a growth tilt to the portfolio. Most around here would prefer to tilt to the value side.

It appears that these are the only 3 funds offered by Amana. Do you have plans for bonds or is that just out of the picture?



Thanks. Yes unfortunately bonds are out of the picture.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 3:39 pm

dbr wrote:It is noted that only these are all stock funds except the third which holds 20% in cash (for now).

It would be a good idea to think about the stock/fixed income distribution and what to do if almost 100% stock is too risky.


Thanks. As bonds are unavailable to me, I'm trying to figure out a fixed-income bond substitute. I've been looking to REIT's, MLP's, and real assets including farmland/ranch land.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 3:44 pm

Also, here are the expense ratios (horrendous I know):

AMAGX (Growth) 1.13%
AMANX (Income) 1.20%
AMDWX (Developing) 1.61%

dbr
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Re: Amana Portfolio Allocation

Postby dbr » Tue Jun 18, 2013 3:56 pm

Nomadix wrote:
dbr wrote:It is noted that only these are all stock funds except the third which holds 20% in cash (for now).

It would be a good idea to think about the stock/fixed income distribution and what to do if almost 100% stock is too risky.


Thanks. As bonds are unavailable to me, I'm trying to figure out a fixed-income bond substitute. I've been looking to REIT's, MLP's, and real assets including farmland/ranch land.


Those things are diversfiers or not, depending on exactly what is involved, but don't serve to significantly dilute volatilty of your assets. However, depending on your age, the amount of assets, how long you plan on being in this plan, etc., you could not need fixed income for awhile.

The standard question is whether or not you have an adequate emergency fund.

There is the option of investing in I bonds which are tax deferred and inflation indexed. The downside for a young investor is that the tax deferral ends at thirty years, which could be the worst possible time for tax to come due. Another alternative is either tax exempt bonds in a taxable account, or, if your tax rate is not too high, just holding fixed income in taxable. A lot depends on how much income is involved, whether or not you can save in excess of the plan in question (we assume this is some kind of tax deferred retirement plan), whether and how much employer match there is, and so on.

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Re: Amana Portfolio Allocation

Postby HurdyGurdy » Tue Jun 18, 2013 5:40 pm

What do the Amana folks suggest as a reasonable substitute for bonds? Don' t they offer such product? They must get that question all the time.
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Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 5:40 pm

dbr wrote:
Nomadix wrote:
dbr wrote:It is noted that only these are all stock funds except the third which holds 20% in cash (for now).

It would be a good idea to think about the stock/fixed income distribution and what to do if almost 100% stock is too risky.


Thanks. As bonds are unavailable to me, I'm trying to figure out a fixed-income bond substitute. I've been looking to REIT's, MLP's, and real assets including farmland/ranch land.


Those things are diversfiers or not, depending on exactly what is involved, but don't serve to significantly dilute volatilty of your assets. However, depending on your age, the amount of assets, how long you plan on being in this plan, etc., you could not need fixed income for awhile.

The standard question is whether or not you have an adequate emergency fund.

There is the option of investing in I bonds which are tax deferred and inflation indexed. The downside for a young investor is that the tax deferral ends at thirty years, which could be the worst possible time for tax to come due. Another alternative is either tax exempt bonds in a taxable account, or, if your tax rate is not too high, just holding fixed income in taxable. A lot depends on how much income is involved, whether or not you can save in excess of the plan in question (we assume this is some kind of tax deferred retirement plan), whether and how much employer match there is, and so on.


It is a 401 (a). Emergency fund in place.

Whether in this deferred plan or outside of it, I cannot invest in bonds. I'm relatively young (<30 yo) so fixed income won't be paramount for a while, but I want to start getting a plan in place.

Since the Amana funds are currently the sole make-up of my stock portfolio, I want to make sure that I'm at least balancing those 3 correctly.

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Re: Amana Portfolio Allocation

Postby livesoft » Tue Jun 18, 2013 5:46 pm

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Petunia
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Re: Amana Portfolio Allocation

Postby Petunia » Tue Jun 18, 2013 6:21 pm

JuanZ wrote:What do the Amana folks suggest as a reasonable substitute for bonds? Don' t they offer such product? They must get that question all the time.


Not from their target market, they don't. :)

Amana funds invest according to Islamic principals. Charging interest is forbidden, so bonds are out.

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Re: Amana Portfolio Allocation

Postby retirementandpf » Tue Jun 18, 2013 6:27 pm

I am also on the same boat with the OP. I think WISEX could be considered as bond equivalent and ADJEX could provide more US stock exposure. AMDWX could also be used for international exposure.

Based on Morningstar x-ray, each fund's AA is below.


AMANX
Cash 3%
U.S. Stocks 78%
Foreign 19%

AMAGX
Cash 3%
U.S. Stocks 79%
Foreign 18%

ADJEX
Cash 2%
U.S. Stocks 93%
Foreign 3%


WISEX
Cash 36%
U.S. Stocks 13%
Foreign 3%
Bond Eq. 42%


AMDWX
Cash 20%
U.S. Stocks 11%
Foreign 70%

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 6:34 pm

Petunia wrote:
JuanZ wrote:What do the Amana folks suggest as a reasonable substitute for bonds? Don' t they offer such product? They must get that question all the time.


Not from their target market, they don't. :)

Amana funds invest according to Islamic principals. Charging interest is forbidden, so bonds are out.


They are just a mutual fund manager, so don't that they advise anything with that regard necessarily, though it would be interesting to see if they have an opinion on the topic.

There has been attempts at a bond substitute, although it remains controversial (given their ultimate similarity to bonds):

See: http://en.wikipedia.org/wiki/Sukuk

I believe ultimately the substitution is a lower-risk income/dividend producing assest (the major principles are that there be risk involved and no money made on money), though what the optimal components of that are yet to be determined.

connya
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Re: Amana Portfolio Allocation

Postby connya » Tue Jun 18, 2013 6:45 pm

I would like to point out that AMANX and AMAGX combined only hold about 130 securities. A heavy growth tilt may not be ideal but I would definitely hold equal weights of both funds just to get as much diversification as possible.

Emerging markets at 20% sounds a little high for a portfolio that is all-stock and already very risky, but again, diversification is important, so it makes sense. I think 40/40/20 is a good choice. Either that or go 45/45/10 to reduce volatility a little.

Recognize that no matter what you do, you are going to see a lot of volatility in this portfolio. REITs sound like a good idea. I wouldn't call them a fixed income substitute (too risky) but their low correlation to your current funds may smooth the ride somewhat which is very important in a portfolio like this.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 6:58 pm

connya wrote:I would like to point out that AMANX and AMAGX combined only hold about 130 securities. A heavy growth tilt may not be ideal but I would definitely hold equal weights of both funds just to get as much diversification as possible.

Emerging markets at 20% sounds a little high for a portfolio that is all-stock and already very risky, but again, diversification is important, so it makes sense. I think 40/40/20 is a good choice. Either that or go 45/45/10 to reduce volatility a little.

Recognize that no matter what you do, you are going to see a lot of volatility in this portfolio. REITs sound like a good idea. I wouldn't call them a fixed income substitute (too risky) but their low correlation to your current funds may smooth the ride somewhat which is very important in a portfolio like this.


Thanks Connya, this is more what I was looking for. Any reason you wouldn't tilt a little more towards AMANX, say 60/30/10

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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 6:59 pm

retirementandpf wrote:I am also on the same boat with the OP. I think WISEX could be considered as bond equivalent and ADJEX could provide more US stock exposure. AMDWX could also be used for international exposure.

Based on Morningstar x-ray, each fund's AA is below.


AMANX
Cash 3%
U.S. Stocks 78%
Foreign 19%

AMAGX
Cash 3%
U.S. Stocks 79%
Foreign 18%

ADJEX
Cash 2%
U.S. Stocks 93%
Foreign 3%


WISEX
Cash 36%
U.S. Stocks 13%
Foreign 3%
Bond Eq. 42%


AMDWX
Cash 20%
U.S. Stocks 11%
Foreign 70%



retirementandpf, seeing as we are in a similar situation, I'd be interested know your allocations...

connya
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Re: Amana Portfolio Allocation

Postby connya » Tue Jun 18, 2013 7:37 pm

Nomadix wrote:Any reason you wouldn't tilt a little more towards AMANX, say 60/30/10


That's fine too, but I don't think you should be too concerned with the growth or value factors. First of all, the difference is less pronounced in larger stocks, and your funds are overweight in large stocks. Second, with so few securities you are less likely to see the trend of the overall market (and the intermittent trend of value outperformance and growth underperformance). I would rather maximize my free lunch of diversification. Also AMANX has a very slightly higher ER.

That being said, I can't imagine 45/45/10 will look much different in the end than 60/30/10, so just pick the one you are most comfortable with.

retirementandpf
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Re: Amana Portfolio Allocation

Postby retirementandpf » Tue Jun 18, 2013 7:52 pm

Nomadix wrote:
retirementandpf wrote:I am also on the same boat with the OP. I think WISEX could be considered as bond equivalent and ADJEX could provide more US stock exposure. AMDWX could also be used for international exposure.

Based on Morningstar x-ray, each fund's AA is below.


AMANX
Cash 3%
U.S. Stocks 78%
Foreign 19%

AMAGX
Cash 3%
U.S. Stocks 79%
Foreign 18%

ADJEX
Cash 2%
U.S. Stocks 93%
Foreign 3%


WISEX
Cash 36%
U.S. Stocks 13%
Foreign 3%
Bond Eq. 42%


AMDWX
Cash 20%
U.S. Stocks 11%
Foreign 70%



retirementandpf, seeing as we are in a similar situation, I'd be interested know your allocations...


My wife and I are in our mid-30s, so my AA goal is 80/20. I am not there yet at the moment (88/12) but I intend to use new money to reach my desired AA. I also use my taxable brokerage account as my CD equivalent for shorter term needs and as emergency funds. The taxable fund is heavy with WISEX (70%) and has a touch of AMANX and AMAGX (30% combined).

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Tue Jun 18, 2013 8:10 pm

retirementandpf wrote:
Nomadix wrote:
retirementandpf wrote:I am also on the same boat with the OP. I think WISEX could be considered as bond equivalent and ADJEX could provide more US stock exposure. AMDWX could also be used for international exposure.

Based on Morningstar x-ray, each fund's AA is below.


AMANX
Cash 3%
U.S. Stocks 78%
Foreign 19%

AMAGX
Cash 3%
U.S. Stocks 79%
Foreign 18%

ADJEX
Cash 2%
U.S. Stocks 93%
Foreign 3%


WISEX
Cash 36%
U.S. Stocks 13%
Foreign 3%
Bond Eq. 42%


AMDWX
Cash 20%
U.S. Stocks 11%
Foreign 70%



retirementandpf, seeing as we are in a similar situation, I'd be interested know your allocations...


My wife and I are in our mid-30s, so my AA goal is 80/20. I am not there yet at the moment (88/12) but I intend to use new money to reach my desired AA. I also use my taxable brokerage account as my CD equivalent for shorter term needs and as emergency funds. The taxable fund is heavy with WISEX (70%) and has a touch of AMANX and AMAGX (30% combined).


Thanks. With regards to the taxable brokerage account as CD equivalent, does that mean you are just keeping cash in the account or are you putting it into any product?

retirementandpf
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Re: Amana Portfolio Allocation

Postby retirementandpf » Tue Jun 18, 2013 8:37 pm

Nomadix wrote:
retirementandpf wrote:
Nomadix wrote:
retirementandpf wrote:I am also on the same boat with the OP. I think WISEX could be considered as bond equivalent and ADJEX could provide more US stock exposure. AMDWX could also be used for international exposure.

Based on Morningstar x-ray, each fund's AA is below.


AMANX
Cash 3%
U.S. Stocks 78%
Foreign 19%

AMAGX
Cash 3%
U.S. Stocks 79%
Foreign 18%

ADJEX
Cash 2%
U.S. Stocks 93%
Foreign 3%


WISEX
Cash 36%
U.S. Stocks 13%
Foreign 3%
Bond Eq. 42%


AMDWX
Cash 20%
U.S. Stocks 11%
Foreign 70%



retirementandpf, seeing as we are in a similar situation, I'd be interested know your allocations...


My wife and I are in our mid-30s, so my AA goal is 80/20. I am not there yet at the moment (88/12) but I intend to use new money to reach my desired AA. I also use my taxable brokerage account as my CD equivalent for shorter term needs and as emergency funds. The taxable fund is heavy with WISEX (70%) and has a touch of AMANX and AMAGX (30% combined).


Thanks. With regards to the taxable brokerage account as CD equivalent, does that mean you are just keeping cash in the account or are you putting it into any product?


I don't hold any cash in the account since it would be subject to earning interest which is not permissible. Therefore, I currently hold 3 funds in my taxable account; WISEX (70%) , AMANX (~20%) and AMAGX (~10%). Our main retirement portfolio, which is a SEP IRA, is heavily in stocks with AMANX, AMAGX and a touch of WISEX.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Mon Jun 24, 2013 7:03 am

What is the ideal developing/emerging market equity allocation? Is it necessary? And why?
(trying to understand as oppose to just blindly allocating).

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Wed Jun 26, 2013 9:34 pm

Anyone else in the same boat as me look into WisdomTree ex financial funds,
DOO
DTN

Same to exclude the main culprit (financial sector), but reasonably lower ER's than Amana.

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Re: Amana Portfolio Allocation

Postby retirementandpf » Thu Jun 27, 2013 11:07 pm

Nomadix wrote:Anyone else in the same boat as me look into WisdomTree ex financial funds,
DOO
DTN

Same to exclude the main culprit (financial sector), but reasonably lower ER's than Amana.


Thanks for sharing it. Do you currently own them?

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Sat Jun 29, 2013 9:58 am

Not yet, but looking into it.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Sat Jun 29, 2013 10:03 am

Maybe one day Vanguard will get an ex-Financials fund. Email them it as a suggestion!

retirementandpf
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Re: Amana Portfolio Allocation

Postby retirementandpf » Mon Jul 01, 2013 5:16 am

This is from another discussion about this topic here: posting.php?mode=quote&f=1&p=1738282
I thought it might help for this discussion as well.

JTravers wrote:I know this is quite a few months after the original post, but I hope the OP finds the following information useful.

The best way to invest in Shariah-compliant passive indexes is to open an account at a broker that offers trading on global exchanges at reasonable prices -- Interactive Brokers, Fidelity, Charles Schwab, etc. -- and buy the 3 iShares MSCI Islamic Index ETFs that trade on the London Stock Exchange (LSE).

They are:
1. iShares MSCI World Islamic ETF (ISWD)
2. iShares MSCI USA Islamic ETF (ISUS)
3. iShares MSCI Emerging Markets Islamic ETF (ISEM)

The World ETF contains US stocks, so you have to keep that in mind when setting up your portfolio.

Beyond that, you're stuck with mutual funds with high fees or trying to create portfolios of compliant stocks yourself. For bond-equivalents, the Wise Capital Fund (WISEX) looks interesting, but -- again -- the high fees will make things difficult. Also, only having one unproven fund with your entire fixed income allocation could be asking for trouble.

nihejazi
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Re: Amana Portfolio Allocation

Postby nihejazi » Fri May 30, 2014 7:59 pm

retirementandpf, do you know if there is any tax implications for a US-reisdent investor investing in UK-based ETFs such as the iShares ETF mentioned (ISWD - ISUS and ISEM)?

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Re: Amana Portfolio Allocation

Postby LadyGeek » Fri May 30, 2014 8:19 pm

FYI - new member nihejazi has started a thread asking for help here: UK taxes on iShares ETF offered by Fidelity

nihejazi - Welcome! Consider editing the post in your other thread with the Amana shares you mentioned here. Having all of the information in one location will help us answer your questions. (Use the Edit button in the top right corner of your post.)
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Re: Amana Portfolio Allocation

Postby bpp » Sat May 31, 2014 5:07 pm

Are individual stocks an option? The expense ratios on those Amana funds are outrageously high.

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Wed Jan 07, 2015 11:15 pm

So since we last discussed this issue, I've decided to add another fund (AJDEX) to the mix. The idea is to add a mid-cap to this large-heavy collection. We are still at a total of ~232 stocks, but it's what we have to work with.

AMAGX (Large Blend) 1.13% 62 holdings
AMANX (Large Growth) 1.20% 48 holdings
AMDWX (Emerging Mkts) 1.61% 54 holdings
AJDEX (Mid-Cap Growth) 0.99% 68 holdings

If people (particularly those more adept at Morningstar x-ray reverse engineering) again wouldn't mind offering insight as to the best allocation to most closely mimic a total world style-mix, I would be very grateful.

Another fund I considered was IMANX, and while attractive because its offers another 160 stocks in its holdings, I ruled out due to its higher ER (relative here I know), high turnover, and is Large Growth so doesn't really over much diversification to the current mix.

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Re: Amana Portfolio Allocation

Postby Nomadix » Thu Jan 08, 2015 5:05 pm

My starting off point is:

40% AMAGX (Large Blend)
40% AMANX (Large Growth)
15% AJDEX (Mid-Cap Growth)
5% AMDWX (Emerging Mkts)

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Re: Amana Portfolio Allocation

Postby in_reality » Thu Jan 08, 2015 6:24 pm

Nomadix wrote:
If people (particularly those more adept at Morningstar x-ray reverse engineering) again wouldn't mind offering insight as to the best allocation to most closely mimic a total world style-mix, I would be very grateful.


Your targets are here:

http://www.bogleheads.org/wiki/Approxim ... ock_market
http://www.bogleheads.org/wiki/Approxim ... ock_market

The tool for the job is here:

http://portfolio.morningstar.com/RtPort ... =0.7055475

Given that the composition of the funds will likely change (either from the companies moving around the nine-box or changes to the companies in the funds), this seems like something you'd want to do periodically to watch out for style drift.

In any case, AJDEX isn't showing up. What you have without it is about 76% large caps which is about market proportion.

Anyway, AMAGX and AMANX overlap and you can see that in XRAY under the intersection tab. When data for AJDEX comes through, you may want to check that too if you really care about the true number of stock holdings. It only shows the top holdings though so it isn't complete but will give you an indication of your overlap.

How
Let's all be reasonable now!

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Re: Amana Portfolio Allocation

Postby Nomadix » Thu Jan 08, 2015 10:11 pm

Sorry, that was typo, ticker should have been ADJEX not AJDEX

http://quotes.morningstar.com/fund/adjex/f?t=ADJEX

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Re: Amana Portfolio Allocation

Postby stratton » Thu Jan 08, 2015 10:45 pm

Preferred stock might also be an option since it's not a bond.

There are several ETFs such as PFF etc.

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in_reality
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Re: Amana Portfolio Allocation

Postby in_reality » Sat Jan 10, 2015 6:37 am

Nomadix wrote:Sorry, that was typo, ticker should have been ADJEX not AJDEX

http://quotes.morningstar.com/fund/adjex/f?t=ADJEX


Well personally, and this is just me -- we are likely very different people, I would be more likely to go with:

35% AMAGX (Large Blend)
35% AMANX (Large Growth)
20% ADJEX (Mid-Cap Growth)
10% AMDWX (Emerging Mkts)

My reasons is that number of holdings in each fund is small. AMAGX and AMANX overlap somewhat. Adding more AJDEX and AMDWX would diversify you I think.

You'd end up with a mid cap and growth tilt:
12 . 24. 30
02. 16. 13
01. 01. 01

Since two of your 3/4 funds are growth funds, you are going to have a growth tilt for sure. AMANX is actually slightly tilted value though so I would over weight it a little.

Anyway, since AMDWX is emerging markets maybe it's too much risk for you. 65% of holdings are in the following countries:

United States 14.31
South Africa 11.96
Malaysia 11.54
Indonesia 11.03
China 10.52
Brazil 8.63

Personally, I'd be willing to invest in those countries for international exposure. Europe adds another 11% with Turkey being the major holding at 4.5%.

AMAGX has 8.5% in developed Europe (Denmark, Switzerland, and the Netherlands) and 2.8% in Asia (split between Taiwan and India)
AMANX has 8.70% in developed Europe (U.K. is highest at 3.61% and Switzerland is next) and 2.63% in Taiwan
ADJEX only has Sweden at 1.13%

So overall you'd have 18% internationally.

So finally, with a mid cap and emerging tilt, you may see more volatility than total market. Still, if it were me, I might even boost AMDWX up to 20% and reduce your US holdings a little more.

Most likely I'd go with more in value:
20% AMAGX (Large Blend) --> ACTUALLY THIS IS LARGE GROWTH
45% AMANX (Large Growth) --> REALLY LARGE BLEND BUT HAS A VALUE TILT
20% ADJEX (Mid-Cap Grow)
15% AMDWX (Emerging Mkts)

Gives you 21% international:

15. 26. 27
03. 15. 12
01. 01. 01

AMANX is a dividend fund though so may not be the best in taxable. It seem only about .8% higher than AMAGX though so not such a huge huge difference.

Just for reference 21% international with Vanguard total market funds is:

25. 24. 25
06. 06. 06
03. 03. 02
Let's all be reasonable now!

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Re: Amana Portfolio Allocation

Postby Nomadix » Sat Jan 10, 2015 2:24 pm

Thanks in_reality, exactly the kind of analysis I was looking for!

I definitely would also favor the tilt towards value and the increase in international exposure, particularly as this would be my entire portfolio and I have no international fund so to speak. Even while 21% is still relatively low, it's better than the lower allocation I had.

I am willing to endure the increased volatility at this point given my longer time horizon, but as I age I will probably have to tilt back towards growth, especially since I haven't yet found a bond substitute. The only other hesitation the (relatively) high ER of AMDWX, but given my options I'll have to make due.

Thanks again! Any further suggestions are welcome.

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Re: Amana Portfolio Allocation

Postby in_reality » Sat Jan 10, 2015 4:57 pm

What about FIA?

I came across it looking for bonds. They follow a Russell index, have a lower ER, have more holdings, include mid-caps and are relativel balanced (though still growth tilted).

It was said they were to indroduce a suitable bond fund 4Q last year but it's not appearing on their page.

Have a look and see what you think.

I like Russell indexes myself. OK thier earlier ones had some problems with front running and whatnot but hey we all learn...

http://khaleejtimes.com/biz/inside.asp? ... onanalysis
Let's all be reasonable now!

Nomadix
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Re: Amana Portfolio Allocation

Postby Nomadix » Sun Jan 11, 2015 10:59 am

Oh wow, great find! This totally passed me by. Looks like it just got established last October. While I wish the ER was a little more in line with other index funds, I'm glad someone is starting to put out these products!

The only 1.2 mil total assets is a little concerning with regards to its viability, it is still very new so we'll have to wait and see. Either way very exciting and I hope this will be the start of many more similar products in the future.

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Re: Amana Portfolio Allocation

Postby LadyGeek » Mon May 25, 2015 4:04 pm

New member revaldo29 posted here requesting assistance with his portfolio. I moved the post into a new thread: Amana Portfolio Allocation [Portfolio help]
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Theoretical
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Re: Amana Portfolio Allocation

Postby Theoretical » Mon May 25, 2015 7:51 pm

A friend of mine in a similar position asked my thoughts a couple of weeks ago, and I found something that might be a suitable piece of the bond allocation:

http://www.myuif.com/financing/personal-shariah-compliant-profit-sharing-savings-accounts/ Profit-sharing earnings would seem to function in a way functionally similar to preferred stock, only with a variable return. The interesting question is whether the share is an equal interest or a superior interest, in terms of the owners' interests.

This would be an interesting site of note as well. http://rizqmanagement.com/ It's rarely updated but sounds like a boglehead trying to figure out this complicated arena.

I've sometimes had clients who require specific investment restrictions in their trust instruments, so this is something that is on the back of my mind, since a big part of my practice is helping clients' estate plans match their values.

Observationally, I've noticed a lot of direct investment in real estate, residential and commercial, along with ownership of precious metals, with these clients. REITs seem like they'd be ruled out, since many projects are built directly on financing.

The other option is to simply play with less money on the table, i.e. having interest-free cash reserves making up the "bond" allocation. It won't provide any benefit against inflation but at least won't be 100% stocks.

revaldo29
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Re: Amana Portfolio Allocation

Postby revaldo29 » Mon May 25, 2015 10:05 pm

Theoretical wrote:A friend of mine in a similar position asked my thoughts a couple of weeks ago, and I found something that might be a suitable piece of the bond allocation:

http://www.myuif.com/financing/personal-shariah-compliant-profit-sharing-savings-accounts/ Profit-sharing earnings would seem to function in a way functionally similar to preferred stock, only with a variable return. The interesting question is whether the share is an equal interest or a superior interest, in terms of the owners' interests.

This would be an interesting site of note as well. http://rizqmanagement.com/ It's rarely updated but sounds like a boglehead trying to figure out this complicated arena.

I've sometimes had clients who require specific investment restrictions in their trust instruments, so this is something that is on the back of my mind, since a big part of my practice is helping clients' estate plans match their values.

Observationally, I've noticed a lot of direct investment in real estate, residential and commercial, along with ownership of precious metals, with these clients. REITs seem like they'd be ruled out, since many projects are built directly on financing.

The other option is to simply play with less money on the table, i.e. having interest-free cash reserves making up the "bond" allocation. It won't provide any benefit against inflation but at least won't be 100% stocks.


Thank you very much for this. My plan at this stage (I'm 30+ years away from retirement) is to just to hold 10% of assets in cash, but an FDIC insured profit-sharing savings account seems like a great option. Since its FDIC insured, I assume that means the principle is guaranteed? I wonder whats an average return with this type of account.

Theoretical
Posts: 155
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Re: Amana Portfolio Allocation

Postby Theoretical » Mon May 25, 2015 10:54 pm

revaldo29 wrote:
Theoretical wrote:A friend of mine in a similar position asked my thoughts a couple of weeks ago, and I found something that might be a suitable piece of the bond allocation:

http://www.myuif.com/financing/personal-shariah-compliant-profit-sharing-savings-accounts/ Profit-sharing earnings would seem to function in a way functionally similar to preferred stock, only with a variable return. The interesting question is whether the share is an equal interest or a superior interest, in terms of the owners' interests.

This would be an interesting site of note as well. http://rizqmanagement.com/ It's rarely updated but sounds like a boglehead trying to figure out this complicated arena.

I've sometimes had clients who require specific investment restrictions in their trust instruments, so this is something that is on the back of my mind, since a big part of my practice is helping clients' estate plans match their values.

Observationally, I've noticed a lot of direct investment in real estate, residential and commercial, along with ownership of precious metals, with these clients. REITs seem like they'd be ruled out, since many projects are built directly on financing.

The other option is to simply play with less money on the table, i.e. having interest-free cash reserves making up the "bond" allocation. It won't provide any benefit against inflation but at least won't be 100% stocks.


Thank you very much for this. My plan at this stage (I'm 30+ years away from retirement) is to just to hold 10% of assets in cash, but an FDIC insured profit-sharing savings account seems like a great option. Since its FDIC insured, I assume that means the principle is guaranteed? I wonder whats an average return with this type of account.


I have no idea about the return, but they do list that the principal is guaranteed in the FAQs. They mention home and commercial mortgages, so it would likely be a mix of mortgage-backed securities and small business loans. http://www.myuif.com/financing/personal ... ing-works/. It's a very interesting approach to banking.

revaldo29
Posts: 8
Joined: Mon May 25, 2015 3:40 pm

Re: Amana Portfolio Allocation

Postby revaldo29 » Thu Jun 11, 2015 11:51 am

in_reality wrote:What about FIA?

I came across it looking for bonds. They follow a Russell index, have a lower ER, have more holdings, include mid-caps and are relativel balanced (though still growth tilted).

It was said they were to indroduce a suitable bond fund 4Q last year but it's not appearing on their page.

Have a look and see what you think.

I like Russell indexes myself. OK thier earlier ones had some problems with front running and whatnot but hey we all learn...

http://khaleejtimes.com/biz/inside.asp? ... onanalysis



Any thoughts on investing in a new index fund with so few assets? FIA is, as far as I know, is the only passively managed index fund offered to Muslim investors in the states and has the lowest ER at .7. Now that the fund has been operational for a few months, can someone outline the risks of investing in a fund with so few assets (about 1.3 million)? Also, the find holds about 400 securities, so I assume it is more diversified than the two Amana funds.?


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