SOLUTIONS > GROWTH STRATEGIES
Sharia-Compliant
Global Equity Model
Utilizes a rigorous and proprietary process to uncover undervalued large cap Sharia-complaint global equities.
Key Features
ENDORSED FOR SHARIA COMPLIANCE BY THE ISLAMIC FINANCE ADVISORY BOARD
Developed with the Islamic Finance Advisory Board, our Sharia-Compliant Global Equity Model has been certified as Sharia-Compliant.
VALUE APPROACH
Our most important pillar is our value investment philosophy.
Global
Our “go anywhere” approach provides more opportunities.
Strategy Overview
The Sharia-Compliant Global Equity Model is generally for clients whose principal objective is long-term capital appreciation.
Starting with a large cap global universe of approximately 1,400 companies, business activity and financial screens are used to eliminate non Sharia-compliant companies. The Model employs a proprietary and systematic process to uncover equities which our analysis indicates are undervalued. The most undervalued securities in our global large cap universe form the focus group for our analytical team to concentrate its research efforts for investment targets. The undervalued stocks from the focus group that pass our research review process become targets for our equity portfolio. Our proprietary TRAC™ system is used in an effort to optimize buy and sell decisions for targets and portfolio holdings.
Key Details
| Inception | October 15, 2019 |
| Investment universe | Sharia-compliant global large cap |
| Style | Value |
Badar Shamim, CIM, CFP
VP, Portfolio Manager
Endorsed for Sharia Compliance by the
The Islamic Finance Advisory Board is a non-profit body engaged in the promotion of Islamic Finance in Canada. It is the only institution in Canada focused on bringing a measure of standardization to Sharia-compliant financial offerings.
Working closely with the Board, Generation’s Sharia-Compliant Global Equity Model has been endorsed as being Sharia compliant by the Board’s scholars. The Board’s endorsement provides Muslims reassurance that the Model is following an investment approach that is consistent with their faith.
The Board will conduct regular audits of Generation’s investment process and review account holdings to ensure the strategy remains Sharia compliant.
Generation PMCA is proud of this unique accomplishment and we thank everyone at the Islamic Finance Advisory Board for their advice, guidance, and encouragement on our efforts to help Muslims in Canada and abroad meet their financial objectives.
Learn more about our Sharia-Compliant Global Equity Model
Investment Process
1. DEFINING THE INVESTMENT UNIVERSE
BUSINESS ACTIVITY SCREENING
Excludes companies that are directly active in or derive more than 5% of their revenues from alcohol, tobacco, pork-related products, cinema/television production, conventional financial services, defense, gambling, and adult entertainment.
FINANCIAL SCREENING
Excludes companies that derive significant income from interest or companies that have excessive leverage. Debt, cash, and receivables all must be less than 33% of total assets.
2. STOCK SELECTION: A HYBRID APPROACH
Portfolios are comprised of securities selected based on our fundamental research and/or quantitative approach.
FUNDAMENTAL PICKS: STOCK IDEAS FROM OUR INVESTMENT TEAM
Generation employs fundamental research and subscribes to a value investment philosophy. We analyze a Company’s operations, finances, and valuation to assess its risk and reward potential.
We believe a value strategy offers two advantages:
- A stock purchased below our estimate of its intrinsic or fair market value offers the potential for outperformance as the stock ascends to fair value.
- Stocks trading below their fair value offer a “margin of safety”; that is, downside risk is mitigated because these stocks are detached from their fair value.
WHAT DO WE LOOK FOR?
+ Good business franchise
+ Strong balance sheets
+ High return on capital
+ Proven management team
+ Competitive advantages
QUANTITATIVE PICKS: TOP-RANKED STOCKS ACCORDING TO OUR PROPRIETARY RANKING METHODOLOGY
Our Sharia-compliant strategy utilizes our proprietary ranking methodology that ranks companies on combined valuation, business quality, financial strength, and momentum metrics.
VALUATION
Stocks are ranked on valuation ratios such as P/E, EV/EBITDA, P/CF, and our own proprietary valuation ratios.
QUALITY
Stocks ranked on performance metrics such as return on equity, return on invested capital, etc.
FINANCIAL STRENGTH
Stocks ranked on debt-to-equity, interest coverage, Piotroski F Score, etc.
MOMENTUM
Stocks ranked on relative performance over the last 12 months.
3. PORTFOLIO MANAGEMENT
CONTINUOUS MONITORING
Positions are continuously monitored for entry into prohibited sectors or balance sheet changes that would make the position non-compliant. Once a material change has been identified we will eliminate the position.
PORTFOLIO OPTIMIZATION
Stocks are sold as they approach their estimated fair values, when our outlook has changed, or when sell signals are triggered in our proprietary trading systems. Our proprietary trading systems help optimize the timing of our individual security buys and sells.
Sharia-Compliant Global Equity Model
Utilizes a rigorous and proprietary process to uncover undervalued large cap Sharia-complaint global equities
Overview
-
Endorsed for Sharia Compliance by the Islamic Finance Advisory Board
Developed with the Islamic Finance Advisory Board, our Sharia-Compliant Global Equity Model has been certified as Sharia-Compliant.
VALUE APPROACH
Our most important pillar is our value investment philosophy.
Global
Our “go anywhere” approach provides more opportunities.
-
Inception
October 15, 2019
Investment Universe
Sharia-compliant global large cap
-
The Sharia-Compliant Global Equity Model is generally for clients whose principal objective is long-term capital appreciation.
Starting with a large cap global universe of approximately 1,400 companies, business activity and financial screens are used to eliminate non Sharia-compliant companies. The Model employs a proprietary and systematic process to uncover equities which our analysis indicates are undervalued. The most undervalued securities in our global large cap universe form the focus group for our analytical team to concentrate its research efforts for investment targets. The undervalued stocks from the focus group that pass our research review process become targets for our equity portfolio. Our proprietary TRAC™ system is used in an effort to optimize buy and sell decisions for targets and portfolio holdings.
Endorsed for Sharia Compliance by the
The Islamic Finance Advisory Board is a non-profit body engaged in the promotion of Islamic Finance in Canada. It is the only institution in Canada focused on bringing a measure of standardization to Sharia-compliant financial offerings.
Working closely with the Board, Generation’s Sharia-Compliant Global Equity Model has been endorsed as being Sharia compliant by the Board’s scholars. The Board’s endorsement provides Muslims reassurance that the Model is following an investment approach that is consistent with their faith.
The Board will conduct regular audits of Generation’s investment process and review account holdings to ensure the strategy remains Sharia compliant.
Generation PMCA is proud of this unique accomplishment and we thank everyone at the Islamic Finance Advisory Board for their advice, guidance, and encouragement on our efforts to help Muslims in Canada and abroad meet their financial objectives.
Investment Process
-
BUSINESS ACTIVITY SCREENING
Excludes companies that are directly active in or derive more than 5% of their revenues from alcohol, tobacco, pork-related products, cinema/television production, conventional financial services, defense, gambling, and adult entertainment.
FINANCIAL SCREENING
Excludes companies that derive significant income from interest or companies that have excessive leverage. Debt, cash, and receivables all must be less than 33% of total assets.
-
Portfolios are comprised of securities selected based on our fundamental research and/or quantitative approach.
FUNDAMENTAL PICKS: STOCK IDEAS FROM OUR INVESTMENT TEAM
Generation employs fundamental research and subscribes to a value investment philosophy. We analyze a Company’s operations, finances, and valuation to assess its risk and reward potential.
We believe a value strategy offers two advantages:
- A stock purchased below our estimate of its intrinsic or fair market value offers the potential for outperformance as the stock ascends to fair value.
- Stocks trading below their fair value offer a “margin of safety”; that is, downside risk is mitigated because these stocks are detached from their fair value.
QUANTITATIVE PICKS: TOP-RANKED STOCKS ACCORDING TO OUR PROPRIETARY RANKING METHODOLOGY
Our Sharia-compliant strategy will utilize our proprietary ranking methodology that ranks companies on combined valuation, business quality, financial strength, and momentum metrics.
-
CONTINUOUS MONITORING
Positions are continuously monitored for entry into prohibited sectors or balance sheet changes that would make the position non-compliant. Once a material change has been identified we will eliminate the position.
PORTFOLIO OPTIMIZATION
Stocks are sold as they approach their estimated fair values, when our outlook has changed, or when sell signals are triggered in our proprietary trading systems. Our proprietary trading systems help optimize the timing of our individual security buys and sells.