NEST Sharia - changes to fund.

BlackKnightMonty

Cus said:

Amoux said:

I will need to see the allocation properly before making any decision, but to be honest I'm a bit annoyed by the update. The whole point of investing in the sharia fund was for the higher risk. I was happy with the risk level and de-risking my fund into so called "Sukuk bonds" does me no favours. 

I always assumed that the mandate for the Sharia fund is not to invest in high risk, but to invest according to religious values.  I guess a byproduct was that it ended up investing in growth tech.
I'm sure there are other non religious designed funds that offer the same high risk?

NEST Sharia outperforms all other NEST funds, including high risk.

APWhiteSavvy

Wow, this is going to annoy a lot of people.

APWhiteSavvy

Looks like it's been planned since 2021, we just didn't spot it!
<pre class="CodeBlock"><code>https://www.mallowstreet.com/Article/b58289

This might also be a factor for master trust Nest’s sharia fund. Stephen O’Neill, who heads up the private markets team at Nest, said the Nest Sharia Fund invests in a passive portfolio of global equities which tracks the Dow Jones Islamic Titans 100 index.  

While he said Nest is “always open” to adding more sharia-compliant asset classes, such as sukuk,"we haven’t found an appropriate solution yet”.  

The fund is globally diversified but with some stocks screened out, “it remains true that it is somewhat more concentrated than an unscreened equity portfolio would be, and isn’t as diversified as other Nest funds”, added O’Neill.  

Sukuk could be a way to diversify; the UK government’s sterling sukuk “is certainly something we’ll consider”, he remarked.

Universidad

BlackKnightMonty said:

NEST Sharia outperforms all other NEST funds, including high risk.

Has outperformed other NEST funds over the last few years.

I do worry about the number of threads where people are switching to a fund that has been performing well.

It's always nice to hit a good run, like various Sharia funds have had, but surely the point of index funds is not to worry about timing the market.

engagedandopen

monkeys_uncle said:

Last time I looked, the 'Higher Risk' fund was about 71% bonds, so it will be interesting to see how that compares with the new Sharia asset allocation. 

Well, these days it's more like 71% equities, but the remaining 29% is mostly in high risk assets too: high yield bonds, emerging market debt, property and commodities.  It's sometimes necessary to look beyond the equity:bond allocation.  In this case, the remainder isn't invested in sterling investment grade bonds, or even developed market corporate bonds, apart from something like 1% in each.

LHW99

here's a bit more about these bonds. Sounds complicated!

https://www.treasurers.org/hub/treasurer-magazine/what-are-sukuk-and-how-do-they-work

APWhiteSavvy

From someone on Reddit who just chatted with a NEST rep:

From November we'll invest around 30% of the Sharia Fund in sukuk. Sukuk are an Islamic version of bonds. The remaining 70% of the fund will continue to be invested in Islamic-compliant equities (i.e. company shares), following the same strategy as before.

BlackKnightMonty

Universidad said:

BlackKnightMonty said:

NEST Sharia outperforms all other NEST funds, including high risk.

Has outperformed other NEST funds over the last few years.

I do worry about the number of threads where people are switching to a fund that has been performing well.

It's always nice to hit a good run, like various Sharia funds have had, but surely the point of index funds is not to worry about timing the market.

Pretty sure Sharia has outperformed all the other NEST funds since NEST was started in ~2011.

BlackKnightMonty

APWhiteSavvy said:

From someone on Reddit who just chatted with a NEST rep:

From November we'll invest around 30% of the Sharia Fund in sukuk. Sukuk are an Islamic version of bonds. The remaining 70% of the fund will continue to be invested in Islamic-compliant equities (i.e. company shares), following the same strategy as before.

Sounds pretty vague!

Brie

why have you received this text?  are you already registered with NEST to be in a Sharia Fund?  

Frankly I didn't know there was a way to have a preference.  Then again my participation in NEST is unlikely to give me much more than enough to go to the chip shop when I retire in a year or 2.