SEDCO Capital’s new investment strategy Prudent Ethical Investing (PEI) can “avoid excess leverage” and create “optimal risk adjusted returns”, according to Kamran Butt, the firm’s managing director.
Speaking at a panel on responsible investing at the Islamic Finance Forum, Butt suggested that both sets of principles combined, “create optimal risk adjusted returns and provide the right investment characteristics for our clients”.
The strategy, which officially launched in August, integrates a Shariah-compliant investment approach with ethical investment, stressing the importance of due diligence and using environmental, social and governance (ESG) criteria.
Butt said: “We call this PEI, combining Shariah principles, which involve avoiding excess leverage, and ESG principles which ensure our investments serve society. We have found that both sets of principles combined, create optimal risk adjusted returns and provide the right investment characteristics for our clients.”
In a SEDCO white paper, titled: ‘How can Responsible Investors Benefit from Islamic Criteria?’, the group found that Shariah-compliant portfolios have outperformed conventional investment strategies across the US, Europe and Asian equity markets.
Christian Gueckel, chief risk officer at SEDCO Capital, said: “The lower financial leverage and better cash conversion result in a bias to quality and growth which adds a prudence element to Islamic portfolios. Our results show clearly that responsible and unrestricted investors would have performed better using Islamic criteria.”
Hassan Al Jabri, CEO of SEDCO Capital, said: “We now see PEI as a pathway to propel our business forward with new partners and new projects. Our partners will benefit from a better understanding of how our investment methodology will meet both their performance requirements as well as ESG and responsible investment principles.”
