The Amana Mutual Funds Trust Income (AMANX) is a mutual fund that has been managed by Nicholas Kaiser since 1990. The fund is different from most in that the fund is managed according to Islamic principles and follows a value management style. The Income Fund only invests in common stocks, including foreign stocks. More specifically, AMANX also only purchases securities of dividend-paying companies, which are expected to be larger and more stable.
Performance wise, the fund has done well with its strategy and strict requirements. Its 10 year return is at 8.38% compared with the S&P's 2.90%. The fund returned 1.94% in the past year and 12.22% in the last 3 years.
The following are the fund's top 10 stock holdings:
Most of these top holdings are in consumer non-durables, in companies such as sportswear provider Nike, foods company Pepsico, and consumer goods business Procter & Gamble. This sector has about 29% allocation of the fund portfolio. The next largest sector allocation is 16% in healthcare, evident in the top holdings with pharmaceutical companies Eli Lilly and Bristol-Myers, and personal healthcare company Colgate-Palmolive. Technology stock Intel, energy company Exxon Mobil and railroad company Canadian National Railway are all good, solid mega companies that fit in the current environment: Intel has been benefiting from rising PC sales and widespread gadget adoption, Exxon Mobil is a dominant player in one of the most desirable (but also volatile) energy resource exploration and refinement industry. Finally, Canadian National Railway operates trans-continental North America railroad that has been doing well amid global trade from the east, even in the current tough global environment.
Colgate-Palmolive deserves some special mention: This oral care and personal care product company has been one of the most successful stories in corporate America. From 1977 to 2011, its stock has returned 18% annually. The following chart shows the return comparison between CL and S&P 500 Index (^GSPC) or ETF SPY: (Click to enlarge)
Many of these companies are large and well known to be quite stable, which is in line with AMANX's investment principles.
The following compares the fund performance with two diversified ETF portfolios that use dividend and high income bond ETFs:
The consistent Islamic principles and value-driven investment style paid off big time for AMANX. In the last 5 year period, this fund returned 5% annually, handily beating the Strategic ETF portfolio (1%).
To summarize, Amana fund's top holdings are good candidate stocks for an investor researching to construct a portfolio who is concerned about risk and consistency. These solid companies' stocks will give investors peace of mind in their portfolios.