Daniel Jolliffe & Oliver Harwood, Co-Investment Managers of the Shariah-Compliant Discretionary Portfolio Service, Quilter Cheviot Jersey.
Quilter Cheviot’s launch of a Discretionary Shariah-Compliant Portfolio Service could appear, from an outsider’s perspective, to be a significant deviation from ‘normal protocol’. In practice, it is very much business as usual. Quilter Cheviot have possessed a foothold in the Middle East ever since the launch of their Dubai Office in 2016 and, despite the vast majority of their clientele being ex-pats, from inception there have been regular requests for Shariah-Compliant investment proposals.
However, there has always been one issue with facilitating this offering – the lack of a Shariah Supervisory Firm or Islamic Scholar, meaning an inability to guarantee authenticity and Shariah compliance. Quilter Cheviot is now able to provide this solution in partnership with Yasaar, a Shariah supervisory firm, which possesses a three-man Shariah-Advisory Board. Yasaar specialises in advising and assisting financial services firms to create innovative Shariah-compliant financial solutions. Yasaar have a strong track record of creating Shariah-compliant indices for companies such as FTSE and possess extensive knowledge and experience in Shariah solutions. Crucially, Yasaar issued Quilter Cheviot a Fatwa (Shariah ruling) in January 2022, that confirms the authenticity of the solution in terms of Shariah compliance.
It is clear that this represents a significant opportunity. In 2021, Jersey Finance launched a significant study into the attitude towards the Islamic finance wealth management market by Muslim High Net Worth individuals (HNWI), compiling attitudes to private wealth, fiduciary planning and succession by Muslim families. The study took into account the views of over 2,000 respondents across the key markets of the UK, Asia (Kuala Lumpur), the GCC and South Africa.
Two of the key findings of the study were:
– 96% of Muslim HNWI’s are actively planning or preparing for wealth succession, with nearly two-thirds (63%) seeking Shariah compliance advice
– The Islamic finance investor base is becoming ever more sophisticated, demanding great professionalism from financial service providers, whilst continuing to adhere to Shariah principles.
Quilter Cheviot view the launch of the Shariah-Compliant Discretionary Portfolio Service as the collaboration of two experts in their respective fields. Quilter Cheviot will focus on the selection and management of direct equities that will perform over the long-term, whilst Yasaar act as a support function to ensure that the companies selected for inclusion remain Shariah-compliant.
Prior to launching the solution, Quilter Cheviot conducted widescale due-diligence into the existing solutions available to investors in the Shariah-Compliant investment universe and found that there were three significant barriers to entry. The first is transparency. Most of the Shariah-compliant investment universe is collective-related, meaning that, for a retail investor, it is highly likely that you will only be provided with visibility of the top ten holdings via a monthly fund factsheet.
The second barrier to entry is cost. In an industry where the ongoing cost of investment solutions is analysed to the nth degree, the majority of Shariah-compliant investment funds have varying levels of fees. Whilst in the process of researching existing investment solutions, a third barrier became apparent. A small number of multinational banks offer a discretionary Shariah-compliant service to their client base. However, the minimum entry level required to access some of these offerings were in the tens of millions, marginalising a significant segment of the market.
So, what does the Quilter Cheviot Shariah-compliant Discretionary Portfolio service entail? In launching the service, Quilter Cheviot have sought to address the barriers to entry specified above. The solution is cost-effective, with a total ongoing management fee of 1.1%, offers complete transparency of the underlying holdings within the portfolio service and has a minimum entry level to invest at $1m. Each client will have their own specific, segregated portfolio with direct access to the investment managers and will be provided with online access to view their portfolio, along with market commentary and reporting.
As mentioned previously, the provision of the Shariah-compliant service does not represent a significant deviation for Quilter Cheviot. The investment team will be supported by a twenty-two strong in-house research team – one of the largest research teams in the wealth management industry. The service will entail the ownership of 35-40 Shariah-compliant direct equities listed in either the UK, US or Europe. In order to ensure Shariah-compliance, Quilter Cheviot work alongside Yasaar who screen the researched stocks in line with the specific metrics that Yasaar stipulate with their Shariah-Compliant methodology. The output of the screening process then provides Quilter Cheviot’s investment team with a Shariah-compliant universe to select from. The service is co-managed by Daniel Jolliffe and Oliver Harwood who are based in the Quilter Cheviot office in Jersey.
Investors should remember that the value of investments, and the income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee of future results.
This is a marketing communication and is not independent investment research. Financial Instruments referred to are not subject to a prohibition on dealing ahead of the dissemination marketing communications. Any reference to any securities or instruments is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it.
Any mention of a specific security should not be interpreted as a solicitation to buy or sell a specific security.
Quilter Cheviot Limited: is a private limited company, registered in England with number 01923571, whose registered office is Senator House, 85 Queen Victoria Street, London, EC4V 4AB, United Kingdom; is a member of the London Stock Exchange; is authorised and regulated by the UK Financial Conduct Authority; has established a branch in Jersey, and is regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business and funds services business in Jersey, and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey; has established a branch in the Dubai International Financial Centre with number 2084 which is regulated by the Dubai Financial Services Authority; is regulated in South Africa by the Financial Sector Conduct Authority in South Africa. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom.