Halal Money Matters Podcast

Episode 38: How Amana Became #1 in Faith-Based Investing

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Monem Salam:
Welcome to Halal Money Matters, sponsored by Saturna Capital. I'm Monem Salam. And today we have a very special episode because we're going to go backwards in time. A lot of people ask the question about the Amana Mutual Funds and the what was the beginning story. And I wanted to talk to Dr. Yaqub Mirza, who was one of the founders of the funds, along with Nick Kaiser. And also at that time, Dr. Mirza was working for the North American Islamic Trust, or NAIT. So there's a lot of urban legends that I've heard of and, you know, from different people. And this was a great way for us to be able to clear that up as well. So let's get into it and we'll welcome Dr. Mirza.

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All right. Welcome, Dr. Mirza. It's truly an honor to have you on the show. I know you've been on one time before.

M. Yaqub Mirza:
Right.

Monem Salam:
And it's really. It's really good to have you. Today I wanted to spend a little bit of time talking about, the history of the funds, and there's no probably a better person to do that than you, having been there from the very beginning and really knowing the story. Part of this is just for our listeners, who have been investing in the funds for a long time but have not been doing it as long as maybe others have, for example, for you. But then also just to be able to have an anthology of exactly what happened when it happened, those type of things. So it's really is a pleasure to have you.

M. Yaqub Mirza:
Thank you. Thank you so much, Monem. So I came here in 1970, to do my PhD. While I was working on my PhD, I saved some money from my research assistantship and looking for ways how I can invest that money. And I was asking other Muslims who were here longer than me, you know, what did they do? And they told me, we invest in utility stocks or similarly, energy stocks or utility stocks basically.

Monem Salam:
Is the reason why they were doing it at the time because of the oil crisis and prices were going up high, or what? Why utility out of all the different things you could have done?

M. Yaqub Mirza:
I think they felt, it was safe an investment. It was halal and it paid a good dividend. I don't think they went into the analysis of oil embargo at ‘74 and all that stuff, you know, not that sophisticated. So I think they were looking more at dividend, some growth. And they felt that to be the same thing. So I started looking into investing in the stock market. Being a newcomer, not knowing the system I was very reluctant to, you know, give my money away or what little I have, and take a chance. As you know, back home stock markets are not very well developed and a lot of fraud. And so you're, you know, just concerned. Then I start investing. And over time I thought, well, you know, if it works for me, why don't we form a small group of Muslims, like minded friends, people who you know, come and pray with us on Friday and be able to invest together. More money the better, because you can't buy too many stocks with a very small amount of money.

Monem Salam:
Where were you at the time?

M. Yaqub Mirza:
I was in Dallas, Texas.

Monem Salam:
Okay.

M. Yaqub Mirza:
And but then I graduated with a PhD and a master's degree in education. And I went to Toronto, York University. So that's where we really formed the United Investors Group. I think we had about 20 people investing, not a whole lot of money. We had probably $30,000, which we invested, and we made some money. We used to meet every week. Unlike regular investment clubs, you know, they bring more stocks and talk with stocks and this and that. I was leaving that one to the stockbroker. But we learned how to do proper sharing. We also learned how to calculate zakat on, you know, on the return. At that time when the Afghanistan war was going on, Russa was taking over and we were able to pay our zakat to some poor people in Afghanistan or in Pakistan.

Monem Salam:
The United Investments Group that you mentioned, so this was based now in Canada?

M. Yaqub Mirza:
It was in Toronto.

Monem Salam:
Okay.

M. Yaqub Mirza:
We had good social interaction. We got to know each other. It also provided us a social forum where we can have a meal together as one support. Then I moved to Indianapolis, and I left the group to other people to manage. So when I came to the United States, back to the United States, I started thinking that, you know, it worked at a small scale. Why cannot we have it on a national level where people can invest across state lines and different cities, and it's more regulated, more organized. And I don't have to do the accounting myself. So in Indianapolis, I went around visiting with 4 or 5 law firms, and they gave me $50,000 as estimate to do the filing with the SEC. Now, poor Yaqub I didn't have $50,000 at that time. And obviously I didn't know what was going to be. So one of the law from, you know, the person Jim Strain. Yes. He used to be the attorney for Unified Management. So he told me. Have you met Nick? I said no, so he said, here is a phone number and Nick Kaiser, I think you should go talk to him.

Monem Salam:
Okay. So when you moved to Indianapolis, you were working there full time, I'm assuming.

M. Yaqub Mirza:
Yeah, I was, working with the Association of Muslim Scientists and Engineers. I was a staff person. And, that's what, you know, I was doing, I was helping MSA also and others. I moved there in ‘81. So I called Nick, he was fairly responsive, he said I'm coming over, talk to me. And I didn't know much about investing at that time. Nick was very, hospitable, very generous. He listened to my story and he said, look, I don't know anything about Islamic investing, but I invest, I manage my funds, and I'm willing to take on another fund. And he, had one attorney, in-house attorney. He called on him and he said, okay, this is what we want to do.

Monem Salam:
Was there ever a time that in that conversation that you were having that Nick said, oh, wait, these criteria are too restrictive or…?

M. Yaqub Mirza:
Not really. He was very, very accepting. And, you know, and he just took my word for it. Okay. Next, I then, you know, moved into NAIT, I was managing NAIT acting as a manger of NAIT. And that happened in ‘83. So then I was more into business environment, and that's where I went to see Nick end of ‘83. And then early part of ‘84, we started the process.

Monem Salam:
Yeah. So just to be clear, so NAIT is the North American Islamic Trust?

M. Yaqub Mirza:
That is correct. So we had a board meeting of NAIT and I invited Nick to come and meet with the board. So he came and he met with the board and we discussed the initial board members of Amana were the board members up North America Islamic Trust. And it took us a year and a half, to, you know, get the approval. He was a very supportive, you know, he said, you know, look, it's not going to happen. I'm going to quit. I work with an attorney, and we file the prospectus. And, you know, finally, there was one question SEC came back that was early ‘86, you know, pretty much went into filing and refiling. And they said, well, if you are not going to invest either cash into money markets or into bidding, fund, your return is going to be less. And so you need to put another disclosure. So we put out a disclosure. And finally, we got approval around June ‘86, July ‘86.

Monem Salam:
Was that the only restriction that they had on the in the two years?

M. Yaqub Mirza:
I know they asked a lot of questions before, but this was the last straw, which was related to the performance. Other than that, I mean, they had many questions. It's the first fund they saw, the SEC ever saw to approve. So it took longer than usual. And at no time I felt that Nick felt, you know, look this is not happening and it's a waste of time. He really was very supportive, very committed. So we started with Amana Income Fund and as I remember, NAIT put $100,000 to start the fund. And then many of us, we also put in the money. Now during this process, in April 84, I moved to Virginia and, so Nazir Uddin Ali took my position in Indianapolis in NAIT, I came here to manage our foundation, and I had a lot more access to funds. So we were also able to put in the fund whilst the fund became operational.

Monem Salam:
And so, what do you think was the initial amount that started with, do you have any any recollection of that?

M. Yaqub Mirza:
No, because I was not keeping me accountable.

Monem Salam:
Yeah. Yeah. That's right. Yeah.

M. Yaqub Mirza:
We were just selling the funds. But I think it was $200,000 we started, and then it grew. Historically, you know, it took a long time for us to really attract investors. And I think one of the, one of the drawback was really the first fund, first Islamic fund, people are just not sure, you know, whether this is going to work or not. And secondly, as I mentioned earlier, Monem, historically in our countries, stock markets are not that well established, the regulations are not there. So there's always an issue people, you know, going to fraud and making false promises and people are not very much equipped to investing in stock market. I think that was our biggest barrier to cross over.

Monem Salam:
I think also, I mean, just correct me if I'm wrong, but I would think that the Muslim community was very young also. I remember and so, you know, if that was the case, then they would have some really small amounts of money incrementally to put in rather than large amounts.

M. Yaqub Mirza:
And yeah, you're right. Mostly we were students and, as students, we didn't have enough money. And what we had was, you know, it was, not much to spare and to take the risk. So many factor was, you know, going side by side were more kind of attuned to investing in real estate. You know, you can't buy a apartment or a townhouse or something or, you know, a few hundred dollars or a few thousand dollars. So I think it took us a long time to get people to know, the mutual fund industry, and investing in Amana.

Monem Salam:
So, I mean, I think, there's, you know, there's a lot of, at least at Saturna itself and even outside, when I talk to others, there's a lot of urban legends that are out there. So I want to maybe mention some of them. And you can tell me, hey, is this is accurate or not? Right. So one of them that I heard, I didn't hear about the, the $100,000 investment initially. But then shortly right after you started the fund and invest the money, there was the stock market crash.

M. Yaqub Mirza:
So we started in ‘86. Okay. And that was in ‘87. Yeah, that didn't help much.

Monem Salam:
Yeah. Did you yourself panic by any chance, thinking about taking the money out or?

M. Yaqub Mirza:
Not really, because I didn't have much money. I didn't invest much. It wasn't big of a panic. Sure. So now during this process, Nick sold Unified Funds to Mutual of New York, MONY. And when they acquired it, they kind of looked at our fund, it looked funny to them, and they weren't very interested in, you know, acquiring it as part of Unified. So Nick disappeared from Indianapolis and he surfaced in Bellingham, Washington State. And I'm sure you know that story, Washington State doesn't have a state tax and Indiana does. So whatever capital gain he was receiving, he had them to send it to Washington. So you received the income when he was there. Therefore he, you know, saved basically state tax. And if I'm not telling you too many secrets, he bought a house with that savings he has from the state tax.

Monem Salam:
That's really good. 

M. Yaqub Mirza:
So if he if he doesn't like this one, you can take it out. That's the story I know.

Monem Salam:
That's great. Okay. Let me let me tell you another urban legend if you don't mind. The other one was, and then this will come up probably even after, you know, Bellingham. But it was really more, the fact that as you were between, as you were very small and growing, there was a certain amount of shareholders that you needed to be able to publicize in the Wall Street Journal and so you went on a road show with them to talk to as many people as you could, to tell them put small amounts of money so they can get to that shareholder number.

M. Yaqub Mirza:
That's very true. So Nick moved to Bellingham and he's going to form Saturna Capital. And he is happy to move our fund with him. And he would be happy to be our investment advisor, but that's our choice. We want to stay with MONY, we can, or we move with him. I had no idea what MONY is. Didn't know anyone. So as they say, the person you know is better than what you don't know. So I told Nick, we are with you. You have been champion. You have been mentor. You have been, you know, you spend so much time and money to get us going. And this was ‘89 just two and a half years after we launched the fund. He formed Saturna, he and his late wife, Markell, both were partners working together. She used to do the books and Nick would write the computer programs and, you know, that's the way we started.

Monem Salam:
Why did you choose an income strategy for the first fund rather than some other strategy? Because you were initially investing in utilities, you said.

M. Yaqub Mirza:
Income was our focus because utility stocks, we didn't love the utility but we love the dividend and it's more stable. You know, people are going to use water, electricity therefore there will be a dividend to be paid.

Monem Salam:
One more urban legend, right?  So at that time in the 80s with the interest rates obviously on savings accounts was very, very high. And so one of the reasons that I've heard that in the in the income fund was starting to was because you wanted an alternative to a savings account. And so which could actually give you a dividend or, you know, yield, insofar as income is concerned.

M. Yaqub Mirza:
Yeah. You see, if you go back and look at 70s and 80s, growth was not very much known. All the technology companies and Y2K and everything else came later. At that time, people all focused on income, rental properties and this and that. It was just income. How kind of have some income and not have my money sitting in the bank because that was a more common vehicle—savings account or credit union. So that's the way we kind of started. A later stage, we felt that we should, you know, have Amana Growth because that's where the technologies and, you know, a new broom started coming up. People started knowing that technology is something to be had. At that time, you know, the biggest company you ever had was in terms of, assets, how much assets you have, and, you know, how many people are working there, you know, production facilities and all that. But now look at, Microsoft. They practically had no assets except the building to accommodate people, but there is technology but doesn't require a building to be had. I have a software company and all they have is floppies. Now. But the value is 60 million. 80 million. So that was the new phenomenon which happened late 90s. And so that's when we started the growth fund.

Monem Salam:
You had mentioned that you were you were one of the first to ever do something like this. Not only in the US, but, but technically all over the world. There are a couple of, one or two, but for all intents and purposes, you could say you were one of the first to do this. How did you navigate through the Sharia side of it? How did you think about, you know, what should be Sharia compliant? What should be not compliant, those type of things. You mean, obviously there's the alcohol, tobacco, those things. But what else was there?

M. Yaqub Mirza:
Sure. Yeah, I think kind the starting point, my personal knowledge, which we used in the United Investors Group and then the board of North America Islamic Trust. Bassam Osman was the chairman of NAIT at that time, then Dr. Moin Siddiqi was a member. He used to invest in stocks in IBM and others. He was the first one who talked about investing in stocks. Then Jamal Barzenji, a good, you know, scholar, he was on the board of NAIT, and  then myself, but then I resigned, right. I took up the general managership and Ahmed Elkadi. So we had access to, you know, people like Jamal Badawi, Ahmed Zaki Hammad at that time. Muzammil Siddiqi. So all these people were, you know, group of scholars. We can consult and we can, you know, get advice, therefore. And once we get going and then we had Fiqh Council of North America as a formal advisor to the fund. And we had many, many meetings here, you know, in our offices to debate and discuss various, you know, aspects of investing. And Monzer Kahf was with Sheik Hanouti, Monzer Kahf and Sheikh Taha. They were the subcommittee on certain investments. So there were a lot of discussion and debate, which is also then to various classifications that you have now, you know, like as I remember, we developed A, B, C and F level shares. And that came out of that discussion. So that was a learning process all the way, you know. One time, someone called me, said why you are investor in Blockbuster. And I said, well, why? He said, well, they sell X-rated movies. Poor Yaqub, I didn't know what X-rated movies are. So I told them, what does that mean? So he told me, I said, oh, no. So I went to Al-Halal Wal-haram, book of Shayk Qardawi, and sure enough, clear guidance that we should not be putting investment in that. So I called up Nick and I sent him a book and we divested from Blockbuster. So, you know, it is a process which we which we all have to go through. Sometime, you know, we agree sometimes we don't agree. We divested from South Africa. We invested, then we divested, and we went back, no more apartheid.

Monem Salam:
So the initial criteria, just to be clear, so the initial criteria didn't have the financial reach, that those were just done over time because you were still thinking about what to do and how to do it.

M. Yaqub Mirza:
Financial we did not add, financial came later, but we were first started with the Islamic screens and then we had the financial screen.

Monem Salam:
So the origin, and then the, urban legend, the growth fund, it's said that, you know, that, the board of Amana, being independent and always wanting the best return for their shareholders, wanted to have all of the returns of the S&P, but none of the risk as well. So then Nick said, no, you can't do that. So you have to actually have a growth fund to do the risky part. And then the income fund to do the more conservative part.

M. Yaqub Mirza:
Sure. A lot of discussions like this, you know, went on. There was another discussion and that is that funds are not doing well. And we should change advisor and, you know, myself and Jamal al Barzinji we took the view that how do we get the performance? What is the criteria?

Monem Salam:
Yeah.

M. Yaqub Mirza:
And one board member, a local board member, he said, I'm saying so—it's not performing. I said, we cannot take your word for it. Let's decide on a criteria, and if the advisor wouldn't meet the criteria, then we have something to the to talk about. We cannot just come out and say well I think it's not good, so it has to be different. One board member, he said I will take $5 million of NAIT money and invest it on my own. I will show you I will do better than Amana. So we told him, you shouldn't do that. Don't play with the Muslim monies. And we have to manage professionally. Yeah. So we, you know, had all these discussions and all these debates and some of the people they were investing in un-Islmaic mutual funds. And my argument with them was that if you are happy with those un-Islamic mutual funds while you are a board member of the of the Amana Fund. You're not going to promote this one because you're happy with the other funds.

Monem Salam:
Yes.

M. Yaqub Mirza:
And I complained to many people. I looked at the prospectus of the funds in which they were investing and they had bonds and liquor and others. I took my case to different, you know, people who are board members of NAIT like Muzammil Siddiq. I went to mosque in California and I showed to him. Look, NAIT is investing in this one. This is not true when you have an alternative, which is Amana. So it went back and forth, back and forth. But I think the best thing was to have a criteria. And Nick always had the criteria “Preservation of capital.” And he will always say that my focus is that I wanted to preserve the capital. I when the market goes down, we should not go as far down and the market does. And then it goes back and bounces back more because it did not go down as much as it should have. I mean, I didn't know much about market that time, but learning from him that this is a good principle, you know, paid off.

Monem Salam:
Sure.

M. Yaqub Mirza:
And then he did not believe in trading stocks. A lot of people do like to trade. And that was also, something, you know, for me personally, but difficult to, to understand and appreciate, because, you know, sometimes I try to jump from one thing to the other, but you cannot convince Nick to jump ship or sell a stock. Apple, which he bought it for a few hundred dollars.

Monem Salam:
Yeah. So the idea of this trading that you're talking about, also, there's, one, one urban legend that says that the reason why the Amana Funds don't trade much is because of the Islamic criteria, but you're actually saying it's because of more Nick's.

M. Yaqub Mirza:
Yeah. I think, you know, Islamic criteria for trading is there, but trading is permitted, as you know, the trade is permitted. When you buy and sell, you go and buy sugar at some point and you sell it. You are trading. You don't keep it forever. So trading is allowed. Trading if you gamble, speculative trading and trading when you don't own something and you trade that certainly is not permitted. But trading having a commodity price goes up and you sell it and says, okay, but Nick added another factor to it, and that is, I don't trade stocks every day. And, so that, you know, yes, the Islamic background was there. But this was his personal philosophy.

Monem Salam:
I, I know I was going to jump a little bit and talk a little bit about the growth of the funds themselves. Now, you have in 1994, you've come out of a recession now, right? Clinton is in office. Market begins to go up. The economy is doing well. How did you position Amana with the community? What was it like? I know you used to do advertisements in Islamic Horizons, and that still continued up until today. But what else was there? What did you have to do to be able to kind of grow the funds?

M. Yaqub Mirza:
So I hate to take credit. I was serving on the board of executive committee of MSA and in ISNA I never took a formal position, but I used to travel, a lot to different communities. And as part of the visit, which was related to MSA and ISNA and all that stuff, people knew me and I would, you know, make a pitch for Amana. And I remember in certain board meetings, the board material, they used to say that our top salesperson was Yaqub Mirza. (laughs) I never got any money, but I was happy to see that I promoted something which I like, which is good for people and which is Islamic. And it provides us a vehicle to invest our funds and to grow our wealth. Because if you don't grow wealth, you know, we are not going to have the economic power we need to have. So that was I think, main thing and the friends I had made when I was in the MSA, there were a lot. It was like Ahmad Elhattab you know, everybody knew the community that I knew, but then once I moved here, over time, I became more isolated. So I pulled myself a little bit away from the community. And for really the design, design was that investing is a very specialized field, and we need to focus on it. And the focus was to build the Muslim endowment. And I never published numbers with you, endowment called Safa trust, IIIT. We started in ‘86. I was the initial trustee with Nuwal and Hisham, and we had practically no money. And we, raised some money. We started it in ‘95 after spending money on our activities, we had $10 million as our network, our trust fund.

Monem Salam:
Mashallah.

M. Yaqub Mirza:
And then December 17th, when I handed over the endowment back to the other people, I said, no longer I'm going to manage that. It was valued at 350 million.

Monem Salam:
Mashallah. This was in what year?

M. Yaqub Mirza:
Six years ago.

Monem Salam:
Yeah. Wow. Okay.

M. Yaqub Mirza:
And this was after spending about $120 million on the activities of IIIT during that period, ‘95 to ‘17.

Monem Salam:
Sure. Sure. And some of the money was in the Amana Funds as well or was it was managed other ways?

M. Yaqub Mirza:
Yeah. Some of them was it the Amana and you know, the private management, you had someone trust $5 million property portfolio. They withdrew now, and so on, so forth. So that was the work which I was focused on. And as you can see, it requires more that total dedication to, you know, build that kind of money. And so then I left them, we started very small. And now with your help managing our private funds and, all that, we are back up now. I would say the, the family's money we are managing is close to, half a billion.

Monem Salam:
Mashallah.

M. Yaqub Mirza:
Total funds in different projects. And that last six years. Seven years. Well, we started with a good amount, but then we have, to put in double. So I have a bad habit. One day I was meeting with my, all the managers here like Omar Ashraf and everybody. And the Safa Trust was at 100 million. And I told them. And next year, we are going to double it to 200 million. And they all looked at my face, you know, what are you talking about? And Omar Ashraf came back out of the meeting. He said, I'm sure you have good reasons to say what you said, how are we going to do it? So I just vaguely showed it to him, how we're going to do it. And, thank God, we not only doubled, but more than tripled. And then we give it to him. Because 250 million contained $100 million cash.

Monem Salam:
Mashallah. Besides you in the 90s, who else was actually doing the kind of marketing? And thus, was there anybody else?

M. Yaqub Mirza:
Iqbal Unis was helpful. And, but, you know, being myself, being the trustee, one of the trustees, and, you know, founder of the fund, having a good relationship with Nick, I think initially Nick also paid a lot of, you know, dividends because we both felt that we have to succeed. We have to do something. We have to achieve something. And we're, you know, achieving something which is going to be here forever, and so on and so forth. You know, Nick, side comment but I went to Florida to see him in February and on the phone, Tanveer told them Nick was a little bit down, as you know, may we pray for him. And, so Tanveer told him, look, Nick, as I know you for so many years, you are a good person. Good man, good ethics. You know, you're a kind person. And so on and so forth. She hasn't seen him when he gets bad, but that's okay. (laughs) But that we overcome with other qualities. And then she told him that you have good children. They're all educated. They're, you know, doing good things. And then she added something which I didn't think of. She said, you help the Muslim community by creating Amana Funds so much. And now we have money, we have wealth. And that really is the accomplishment which he did. And now you all, all of you are doing it. Yeah. And you have a good part of it. And I feel happy that I was a little part of, you know, just encouraging and, you know, being helpful and, you know, all that. It was not the money. I never took any money from Saturna or from Nick or anybody else. Sure. By the way, we were blamed, Jamal and me, that we are exploiting Nick because we are taking money from him. And that was really so sad to hear that. But, you know, that that's the way it is. Now to give you an example, you know, you know, all these stories, SAR dissolved in 2000 and we had education accounts for each of the applies for the children. So I had, literally thousands in funds for the children. I moved them into Amana Growth. And each of our 4 kids have a $30,000 approximately they invested. Now, the last statement they got, thanks be to God, they have $700,000 each. And they look at me and they say, oh, I could buy a house for that. Sure. I mean, you have to pay taxes also, but, Asma, Monem, came up with a very good idea, she said, this is mostly capital gain. You know, their cost basis is very low because they paid taxes on the dividend and other, but it's still very low. So she said, we will donate this money to Mirza family foundation so we don't have to pay tax. And me, as father, I said give them that money instead of putting it in the foundation. So they want to save the tax. I should pay the money. (laughs) But the family will still save money. Yeah. So really, I mean, I hardly know any kid who will have $700,000 in their account. And, the grandchildren, they have, you know, education accounts and so on and so forth. So really I think that that's the great thing I think you at Saturna should be very proud of that. Your effort, I know you're all compensated everything else but how it'll help Muslim community to grow economically. And Nick. Markell. Then, you know, Jane was too little the time I'm talking about, but, you know, they'll they're all, in it. And I'm just very happy that we did something together, which has, you know, so much promise and so much profitability, has so much wealth creation.

Monem Salam:
No, I totally agree with you, I think my family mentions to me that if I bleed I would, there would be Amana logos coming out of my blood. (laughs) You probably the more than me because you've been doing this for longer, so I totally I totally get that.

M. Yaqub Mirza:
Yeah, I agree, I mean, it's really been a remarkable journey.

Monem Salam:
Let's say, if we can talk about now that we're coming in the 90s and we're coming into the in the crossover between 90's and 2000, the dot com boom, you know, bubble is happening. You know, you have the funds actually doing quite well. I think in 1999 the return on the growth fund was about 100%.

M. Yaqub Mirza:
Yeah. It was very good. Yeah.

Monem Salam:
But one thing that I do want to talk about in this process was the kind of the split from NAIT, that happened. It happened during, I think, around the same time. And I'm not sure if you're comfortable talking about it. We can skip over this.

M. Yaqub Mirza:
Oh, no. Sure. No, no. Basically, I moved here, in April ‘84, and the fund started after that. Original arrangement was that we will pay 0.25% of the of the assets. As a fee to NAIT, as Sharia advisory, you could call it as helping in the marketing and sales and, you know, so that was the arrangement. I was very happy that as fund grows, it will help, North American Islamic Trust to do more publications and everything else better.

Monem Salam:
That's true.

M. Yaqub Mirza:
So it worked quite a long time. If I'm not mistaken, there were two parts. 0.25% was for marketing and sales. And 0.25% was for the, advisory. Anyway, so NAIT practically did not do much, and when the fund was paying to NAIT, they wanted to get out of the statement of Nate. And there was concern that, you know, we are paying people's money, and we want to make sure that these are our statements. And during that time, we also shifted the fee to fit council and the fit councilor did 0.25% for some time. And unfortunately, they also, did not perform because many of them really didn't understand financial numbers or funds and so on, so forth. So I think Nick came to a point to look, I'm not getting a service. And why are we paying it? How can I justify paying it? And it was coming from the pocket, so that was also, you know, a good reason. And at the same time, there were all the time saying our performance is not good. So then you are on the board, you criticize the fund, you won't get the money, you don't do the marketing, you don', provide the service which you offer. But as you know, NAIT doesn't really qualify as a religious advisor.

Monem Salam:
Sure.

M. Yaqub Mirza:
I mean, there are people who are scholars and religious minded, but NAIT is an entity.

Monem Salam:
That's true.

M. Yaqub Mirza:
Yeah. It's not like Amanie in Malaysia. So really it just came to a point that I don't remember the details, but that's where the split happened. And since I left and came here, my focus became this one. New board members came into NAIT, NAIT took a different route. And that's where it happened. So there was no, you know, fight or anything like that. And then you see, NAIT was investing in mutual funds, which are on the street, and to my mind or people's mind, doesn't make any sense. It's, you know, if you're happy with that, then what are you doing here? That's why should we pay you to, you know, invest somewhere else? Yeah. That's what this, basically what happened. Now, I know NAIT thinks that Amana did wrong because we put the money in to start the fund. Brother, that was your investment. So did other people. If you had paid the legal fees, 100,000 or 50,000, then I could say you have a claim.

Monem Salam:
Yeah. Thank you for clarifying the NAIT aspect so you know, there's no relationship as far as except for maybe brotherly love between us and, and them. Going to the kind of the board itself, and the transition, have you been the chairman from for the entire time except minus a few years?

M. Yaqub Mirza:
No. When, when I moved here, chairman of NAIT was Basam Osman. So he became chairman of Amana. And he remained for some time, until he launched the Iman Fund. And we told them you cannot be chairman of both funds when you are competing with us. And also Iman index fund. We discussed it as Amana. And we said we need to have $5 million, just like you need $10 million to start a fund. So we said, well, we don't have $5 million. So we basically put custody on the shelf, until we have $5 million to start this fund. So Basam took that idea. I don't think it took the study or not, but he took that idea he filed with the SEC, and we found out when he filed the fund, I said he did not consult. He did not ask. He didn't have it informed us. And NAIT called me and said Yaqub, look, Basam just filed for Amana fund, a bond fund. And I was shocked, you know, how could you do this behind our back? You are chairman, when we discuss it, why didn't you say I will put $5 million? Let's start the fund. And if you are going to do it, you have $5 million to put it in. And you cannot be chairman of the board. You see, and he refused to accept that, he did not say that there is a conflict. Okay. Our marketing study, everything is shared. So then when we told him to leave the, that's where the. When was telling him to leave the trusteeship, he said Nick is paying us, that's why we were asking him to leave. So that's where we got Talat elected to the board member. He was much older than me. Senior. More sensible, more wise. I said, okay, you be the chairman. That was a few years back, I was just a kid. (laughs) So I never took the credit that, you know, I could do it. So when we were asking him, Basam, to leave, he was telling people that they want him to leave because I want to become a chairman. And that was never the case. I mean, you know, what's being a chairman? I'm chairman of so many things, what difference does it make. I mean, none of these things I'm sharing pays any money. So, what's the fun? (laughs) He then refused to leave the board. And, we identified Miles Davis and Talat as the future board members. And we had to go to proxy to kick him off the board. I was very happy to do that, because you cannot have a person who takes away your ideas, who goes behind your back and make their own fund. And doesn't see it and the want to leave the board. And since then, by the way, he doesn't have a very good relationship with me and I don't care. In the whole world at one man doesn't love me, it's okay. I can live with it.

Monem Salam:
Thank you for sharing all this because it kind of puts in context the kind of the history of what people are now being able to take advantage of what the funds and how big they are.

M. Yaqub Mirza:
To answer your question. Then I become chairman. Then when there was 9/11 and investigations and all that, I resigned from the board. I resigned from the chairmanship. Basam Osman met me in Saint Louis in one of those strategic planning meetings. There were 50 people gathered, and he asked me that you would like to buy Amana Funds. And I told him, I'm no longer chairman or Amana board member. I can't help him. He was surprised. He was shocked that I'm not chairman. He thought I was kicking him out to become a chairman. And I did, talk to Nick and put them together. But, you know, they couldn't agree. And I think the good thing he did not agree.  Because, you know, otherwise we'll be like a Iman Fund. Not Amana Fund. So, you know, Nick has a depth of wisdom and knowledge. One time I told them sell 50%, they were paying good money, and he came early to consult with me. And after that, he decided not to do it. And, now I think he did the right thing. I was wrong, I get a wrong opinion. But at that time, I thought making money, that much money out of 50% was a good thing. But who knew that they're going to grow like this advisory contract were going to grow like this. And Saturna was going to have $100 million network.

Monem Salam:
Yeah. Very good point.

Well, well, thank you, Doctor Mirza, for taking the time to talk about the, the history of the funds. Is there anything else finally you'd like to kind of wrap it up with, that we, we should the shareholders of the funds and non as well, the Muslim community should know about the funds?

M. Yaqub Mirza:
What I witness of Nick Kaiser, and Kaiser family, is really, the ethics, the truthfulness, the, you know, the trustworthiness. Nick and I, we share together, you know, many, many, many things. Even family level, he's shared with me. And, you know, he knows my kids. It's been a great, friendship, great relationship, a model which I can say how without looking at monetary gain, you can help each other, advise each other and, you know, be a supporter of each other, you know, whatever you want to call it. It's been remarkable. I have, a few friends like that, and it's just a blessing. And, I just wish everybody has friends like that who are sincere, who can give you, you know, like, advice. Markell, we all miss her. She contributed a lot. I mean, Nick's sacrificed a lot for many, many…until you joined, Monem, he never took the money, never took a salary. When he called me, said, Monem is joining, I have to pay him something. So what should I pay him? I should get something like that. And I said, Nick, you're right. You should do that. And imagine how many years was it? Yeah. That he just did not make any money.

Monem Salam:
Yeah. I mean, I joined in 2003 and so that was at least 17 years. So.

M. Yaqub Mirza:
Yeah. That's right. The value from, you know, as in Urdu we say, delos dosti. Friendship without anything in return is something that, you know, is enviable and I think it's an example. Now, it leads me to, you know, hope and wish that Saturna and Amana continue in the future. And I think, you know, with the new trustees coming in, hopefully, Asma and, Jane and yourself being there. But my desire is that this institution should be further built, and I call Asma and Jane “Amana Kids.” And Jane wrote back to me, “Oh, I love this one.” (laughs) But, you know, Asma was born in ‘84. And that's what I met Nick. Jane was eight years old at that time, so really, they are Amana Kids, and they have lived Amana.

Monem Salam:
Yeah. I mean, I remember a time when, when I used to go to the conference and stuff, my kids who were at the time maybe 8 or 9 years old, they could give the elevator pitch for the Amana Funds better than I could, because they'd heard it so many times.

M. Yaqub Mirza:
They are smarter than us. (laughs) I don't remember what year it was when we visited first time, Bellingham, the offices and, I think, Asma was 11 or 12, it's in the book. she was pushing on my shirt, you know, while I'm talking to Nick. And she's said, whispered in my ear, do we have to pay zakat on these funds? And I said, yes. And she said, why don't you, tell these people that we have to pay zakat? And I said, well, you tell them, so she turned, she told Nick, about the zakat and Nick said, if your daddy tells me how to calculate, I will write the program and we will provide that service. So they really know, Amana and they have a lot of investments in Amana.

Monem Salam:
Sure.

M. Yaqub Mirza:
And I think in future whenever you look for the trustees, the criteria is not that you know who is a good speaker or this or that, the feeling of loyalty and not accepting any return is the key issue to grow any institution.

Monem Salam:
Well thank you so much Dr. Mirza for your time.

M. Yaqub Mirza:
You're most welcome. So I'll see you, when you come in October.

Monem Salam:
Inshallah. Definitely. All right. Take care. 

[music]

Monem Salam:
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Disclosures read by narrator:
The thoughts and opinions expressed on Halal Money Matters do not necessarily reflect the views of Saturna Capital, Amana Mutual Funds, or their affiliates. This podcast is prepared based on information Saturna Capital deems reliable; however, Saturna Capital does not warrant the accuracy or completeness of the information. We do not provide tax, accounting, or legal advice to our clients, and all investors are advised to consult with their tax, accounting, or legal advisers regarding any potential investment. Investors should not assume that investments in the securities and/or sectors described were or will be profitable. Investors should consult with a financial adviser prior to making an investment decision. The views and information discussed in this commentary are at a specific point in time, are subject to change, and may not reflect the views of the firm as a whole. All material presented in this publication, unless specifically indicated otherwise, is under copyright to Saturna. No part of this publication may be altered in any way, copied, or distributed without the prior express written permission of Saturna Capital.

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