Cape Town-based asset management company Oasis is celebrating the 20th anniversary of its Oasis Crescent Equity Fund, South Africa’s first fully Shariah-compliant equity unit trust fund, which launched on July 31, 1998.
The fund returned an average of 18.2% a year over the 20-year period, against 12.6% returned by the average domestic Shariah general equity portfolio and 15.29% by the FTSE/JSE All Share Index. Consumer Price Index inflation over the 20 years was 5.6%, meaning an investment made in July 1998 would have grown in real terms by 12.6% a year.
One million rand invested in 1998 would have grown to R28 million today.
Subsequent to its launch of the Crescent Equity Fund, Oasis established a number of domestic and global Shariah-compliant funds in its Crescent range, including multi-asset and property funds, as well as a comprehensive range of non-Shari’ah funds.
Adam Ebrahim, the chief executive of Oasis and portfolio manager of the Crescent Equity Fund, among others, says a lot has changed in 20 years. We have been through the Asian financial crisis, the technology bubble, and 2008/9 global financial crisis, and have seen incredible advances in technology, which have had economic and political implications. Only five of the top 20 global companies of 1998 are still in the top 20, with giants like General Electric being overtaken by the likes of Google, Apple and Amazon.
Ebrahim says it is in challenging times such as these, with volatile markets and rapid technological change disrupting what were once safe industries, that active asset managers come into their own, through careful stock-picking and attention to business fundamentals.
He says that in the wake of the 2008/9 crisis, through the intervention of the major central banks, world financial markets were flooded with cheap capital, resulting in high liquidity. He says the world’s addiction to this easy money has translated into extreme levels of debt, which is not sustainable.
Ebrahim says Oasis is a value manager with a significant focus on socially responsible investing (SRI), and that in many respects Shari’ah compliance fits in with an SRI approach.
SRI involves investing in businesses that have low debt levels, are sustainable and not harmful to the environment or society, and that exhibit good governance.
Shariah funds are not allowed to invest in interest-bearing investments or in companies whose activities are contrary to Muslim law, such as casinos and companies manufacturing alcoholic beverages.
Says Ebrahim: "We are excited about the wonderful businesses and property investment companies that have conservative balance sheets and provide good profitability and robust cash flows, which are currently trading at attractive valuations. We look forward to the value-add opportunities available to the Oasis Crescent Equity Fund and to making use of these to create real wealth for our clients."