SEDCO Capital, one of the largest asset managers in Saudi Arabia, has participated in the Islamic Finance Forum as an associate sponsor to discuss the benefits of combining shariah finance principles with ethical investment.
The Forum, which took place at Mansion House in London, included several panels and workshops focusing on trends in Islamic Finance and European markets. Panel topics included the role of European Stock Exchanges in facilitating Islamic capital raising, Islamic corporate financing activity in Europe and the impact of Brexit.
Kamran Butt, Managing Director at SEDCO Capital, participated in the panel discussion entitled
‘Responsible Investing: The Shift towards Green Finance, ESG & Ethical Funds’, alongside executives from the Luxembourg Stock Exchange and other global institutions.
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Discussing SEDCO Capital’s shift to responsible investment, Mr Butt said: “We call this Prudent
Ethical Investing, 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.”
The participation from SEDCO Capital comes after Mr Hassan Al Jabri, SEDCO Capital’s CEO, launched the firm’s new Prudent Ethical Investing (PEI) investment strategy, integrating Shariah-compliant investment approach with ethical investing.
PEI stresses the importance of due diligence and transparency around investment structures, processes and reporting while also integrating the analysis of environmental, social and governance criteria in the investment process. The strategy seeks to avoid high financial risk and aims to enhance long-term risk-adjusted returns.
Mr Al Jabri, who has been developing the PEI approach since 2013, recently oversaw the publication of a seminal SEDCO Capital white paper, entitled ‘How can Responsible Investors Benefit from Islamic Criteria?’ which looked at the performance of responsible investments,
Islamic investments and conventional portfolios across the US, Europe and Asian equity markets. The research showed that Shariah-compliant portfolios have outperformed conventional and responsible investment strategies over the last decade on an absolute return and risk-adjusted basis across all analysed markets.
SEDCO Capital was the first Saudi asset manager and the first fully sharia compliant asset manager to become a signatory of the United Nations Principles of Responsible Investing (UNPRI), an initiative started by former UN Secretary General Kofi Annan. This principle-based framework called for the incorporation of environmental, social and governance variables when analysing risk for any investment.
SEDCO has seen a sharp rise in the number of investors seeking out its PEI investment products. International investors can choose from over 14 SEDCO Sharia-compliant investment strategies in Luxembourg with total AUMs of $1.8bn. Shariah-compliant asset managers are now recognised globally as providing exceptionally strong platforms.