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1 John A. Sandwick Manager, Safa Investment Services - Islamic Wealth & Asset Management S.A.

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Presentation on theme: "1 John A. Sandwick Manager, Safa Investment Services - Islamic Wealth & Asset Management S.A."— Presentation transcript:

1 1 John A. Sandwick Manager, Safa Investment Services - Islamic Wealth & Asset Management S.A.

2 Sharia-compliant global asset allocation Riyadh, Saudi Arabia In technical cooperation with Islamic Wealth & Asset Management S.A. Geneva, Switzerland April 2013

3 About Safa Investment Services The Investor for Securities Co. (“The Investor”), founded 2007, licensed by Saudi Capital Market Authority SAR 7 billion AUM (about CHF 1.8 billion), mostly local real estate funds Over 800 domestic Saudi clients Leading Saudi investment company, over 40 staff, Riyadh based Just bought position in Islamic Wealth & Asset Management S.A. IWAMSA owns the Safa brand, franchised to The Investor The Investor expanding into liquid asset management, Safa Investment Services Target market is awqaf (Islamic endowments), takaful (Islamic insurance), private clients Large potential market Entirely sharia compliant, bottom-up fatwa 3

4 Islamic asset management Same professional rules as conventional asset management industry Strict filtering, sorting and qualification of all assets Only “best of class” assets allowed Asset allocations fully optimized using advanced asset allocation software Superior results from professional asset management 4

5 The Islamic investment universe SHARIA-COMPLIANT FUND BUY LIST Asset ClassCountAUM Money Market 17$4.7 billion Sukuk 60$2.4 billion Trade Finance 15$9.6 billion Equities 209$14.3 billion Precious Metals 12$18.2 billion Real Estate 9$2.5 billion Special Strategy 59$1.3 billion Total381 $53.1 billion There are more than 800 sharia-compliant funds and ETFs in the world today with over $100 billion Assets Under Management (AUM). Must filter & sort these >800 funds and ETFs, then means-variance test to create a proprietary Buy List: More than $50 million AUM More than 2-year track record Less than 30-day liquidity Acceptable legal jurisdiction Transparent, timely reporting Direct access to managers Fatwa from one or more of the major sharia scholars Qualifying Islamic sub-universe has over $50 billion Assets Under Management. Construct portfolio allocations among the “best of class” funds on a proprietary Buy List. 5

6 Asset allocation, hypothetical Balanced strategy ASSET CLASS % OF TOTAL Murabaha & trade finance5% Sukuk & trade finance45% Global equities35% Alternative Investments15% 6 1. Above is identical to conventional, but entirely sharia-compliant Balanced allocation 2.Muslims require performance equal or superior to conventional allocations, but with full respect for sharia 3.All investible assets must be from professional Buy List 4.Allocations must meet global professional asset management standards, but also strict sharia standards

7 Historic performance 7 Performance measured 1/1/08 to 31/1/13 Portfolio Performance vs. 50% ML Bonds/50% MSCI Equities USD global balanced investing comparables Annualized ReturnCumulative ReturnAnnualized Excess ReturnCumulative Excess Return Balanced Islamic Portfolio USD4.39%24.42%0.81%4.82% Julius Baer Strategy Balanced USD B0.63%3.22%-2.96%-16.37% BlackRock Global Allocation A2 USD0.86%4.43%-2.73%-15.17% Credit Suisse Portfolio Fund Balanced USD B0.49%2.54%-3.09%-17.06%

8 Risk & return 8 Risk & return variables measured 1/1/08 to 31/1/13 Standard DeviationSharpe Ratio Balanced Islamic Portfolio USD7.03%0.56 Julius Baer Strategy Balanced USD B9.18%0.02 BlackRock Global Allocation A2 USD11.84%0.04 Credit Suisse Portfolio Fund Balanced USD B11.49%0.00 50% Merrill Lynch Global Bonds/50% MSCI Global Equities12.18%0.26

9 Drawdown 9 Drawdown measured 1/1/08 to 31/1/13 Max. Drawdown Max. Drawdown Begin Date Max Drawdown Recovery Length Pain IndexGain-to-Loss Ratio Balanced Islamic Portfolio USD-16.29%May-08163.56%0.99 Julius Baer Strategy Balanced USD B-26.19%Jan-08267.62%0.87 BlackRock Global Allocation A2 USD-27.10%Jun-08238.46%0.77 Credit Suisse Portfolio Fund Balanced USD B-28.27%Jun-08248.84%0.91 50% Merrill Lynch Global Bonds/50% MSCI Global Equities-29.04%Jun-08195.90%0.91

10 Return distribution 10 Measured 1/1/08 to 31/1/13 Omega MAR = 0% Upside Omega MAR = 0% Downside Omega MAR = 0% Zephyr-K Ratio Balanced Islamic Portfolio USD1.630.98%0.60%13.4 Julius Baer Strategy Balanced USD B1.091.02%0.93%5.30 BlackRock Global Allocation A2 USD1.11.39%1.26%5.08 Credit Suisse Portfolio Fund Balanced USD B1.081.33%1.23%4.27 50% Merrill Lynch Global Bonds/50% MSCI Global Equities1.311.52%1.16%8.59

11 Omega 11

12 Periodic returns 12 YearJanFebMarAprMayJunJulAugSepOctNovDecTotal Balanced Islamic Portfolio USD 2013 0.87%----------- 2012 4.07%1.67%0.34%-0.55%-3.10%0.84%0.61%1.38%1.47%-0.84%-0.21%0.65%6.34% 2011 0.01%0.19%2.18%2.33%-0.64%-0.32%0.36%-1.66%-3.56%3.09%-1.34%0.91%1.36% 2010 0.33%1.17%3.17%1.22%-3.52%1.58%0.71%1.42%3.03%0.90%-0.18%3.39%13.84% 2009 -1.12%-1.21%1.54%2.71%3.33%0.67%0.88%0.70%2.05%1.84%1.52%-0.32%13.24% 2008 -0.02%1.91%-0.87%2.27%-0.83%-0.80%-0.68%-3.24%-4.40%-6.71%-0.71%2.65%-11.23%

13 Contacts For more information, Saudi Arabia: Safa Investment Services The Investor for Securities Aljomaiah Towers, King Fahd Road P.O. Box 67838 Riyadh 11517, Saudi Arabia Telephone: +966 (1) 200-7002 x 182 e-mail: info@safainvest.com www.theinvestor.com.sa For more information, Switzerland: Safa Investment Services Islamic Wealth & Asset Management S.A. 1204 Geneva Switzerland Telephone: +41 (79) 642-2304 e-mail: info@safainvest.com www.safainvest.com 13


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