Manzil Russell Halal USA Broad Market ETF – MNZL
FAQ
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Manzil Russell Halal USA Broad Market ETF
What is an ETF?
An Exchange-Traded Fund (ETF) is a basket of securities (like stocks, bonds, or commodities) that is bundled into a single security and traded on a stock exchange throughout the day, just like an individual stock. It combines the diversification of a mutual fund with the trading flexibility and transparency of a stock.
What is the Manzil Russell Halal USA Broad Market ETF (MNZL)?
MNZL is an Exchange-Traded Fund (ETF) launched by Manzil Investment Advisors, LLC. It is designed to be a transparent, passive investment vehicle that offers diversified exposure to the U.S. equity market through a values-aligned lens. It combines strict Shariah-compliant principles with an ethical screening process.
Where is the MNZL ETF traded, and what is the expense ratio?
The MNZL ETF is listed and trading on the Nasdaq stock exchange under the ticker symbol MNZL. The stated Expense Ratio for the fund is 0.40%.
How does MNZL fit into Manzil’s overall mission?
The launch of MNZL is described as a significant milestone, representing the company’s deep commitment to building a transparent, inclusive, and socially responsible financial ecosystem that empowers individuals to potentially grow wealth without compromising their beliefs.
Compliance and Shariah Methodology
What makes the MNZL ETF Shariah-Compliant?
The ETF adheres to globally recognized AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) standards through a rigorous two-part screening process on its underlying holdings:
1. Business Activity Screening: Companies primarily involved in prohibited (Haram) sectors are excluded. These include conventional financial services(interest-based), alcohol, gambling, tobacco, pork production, adult entertainment, and defense/weapons. A de minimis rule allows a company to remain eligible if less than 5% of its total revenue comes from these prohibited activities.
2. Financial Ratio Screening: Strict quantitative tests are applied to ensure companies are not overly reliant on debt or non-compliant income:
- a. Debt Level: Interest-bearing debt must be less than 30% of the 12-month average market capitalization.
- b. Interest-Bearing Assets: Cash, deposits, and interest-bearing investments must not exceed 30% of the average market capitalization.
- c. Receivables: The total of cash, deposits, and accounts receivable should be no more than 67% of total assets
What is the Purification Mechanism used by the fund?
Shariah-compliant companies may still generate a small, incidental amount of impermissible income (e.g., minor interest income). The MNZL index methodology includes a purification mechanism where this residual non-compliant income is calculated, earmarked, and provided to the client for purification (customers can then donate to a charity on their own.) to maintain the purity of the investment.
Ethical and Social Justice Screening
What is the "Ethical Overlay" and why did Manzil include it?
Manzil applies an additional ethical overlay because it believes that investing should uphold universal principles of justice and sustainability, moving “beyond Halal compliance.” This layer ensures the portfolio not only avoids prohibited sectors but actively filters out companies involved in global social injustices.
How does the fund implement the ethical screen?
The fund uses criteria established by the American Friends Service Committee (AFSC), a Quaker-founded organization focused on peace and social justice. This provides an institutional, data-driven framework to screen companies for material involvement in activities that contravene universal human rights.
What specific unethical corporate activities does the AFSC screen exclude?
- Apartheid
- Ethnic Cleansing
- Genocide
- Grave Human Rights Violations
Investment Profile and Strategy
What market does the MNZL ETF target, and what index does it track?
The ETF is designed to track the total return performance of the Russell IdealRatings Manzil Halal USA Broad Market Custom Index. This Index focuses on the U.S. market, composed of common stock of large- and mid-capitalization U.S. companies selected from the Russell 1000® Index.
What is the strategic advantage of using the Russell 1000® Index?
By drawing from the broader Russell 1000 (which includes mid-cap companies) instead of narrower indices (like the S&P 500), the fund can achieve broader diversification across sectors and company sizes. This is key because Shariah and ethical screens often result in an over-concentration in sectors like Technology or Healthcare. Including mid-cap companies also offers valuable growth potential.
How is the risk of sector concentration managed?
The Fund manages sector concentration risk primarily through a passive investment strategy that strictly mirrors the composition of its underlying Index. Although the Fund is classified as “non-diversified”—which permits higher exposure to specific issuers—its fundamental policy prohibits concentrating more than 25% of assets in any single industry unless the Index itself is similarly concentrated. Furthermore, to maintain its status as a Regulated Investment Company (RIC), the Fund adheres to strict quarterly asset diversification tests to ensure that no single issuer comprises more than 25% of the Fund’s total assets.
Investing and Risk
Who is the ideal investor for the MNZL ETF?
The fund is specifically designed for:
Investors seeking a low-cost, diversified, and transparent way to invest in the U.S. market while adhering to strict Shariah principles.
Conscious-driven and ethical investors who demand that their portfolios reflect a commitment to universal human rights and social justice.
What are the primary investment risks associated with MNZL?
- Shariah-Investing Risk: The dual-screening process restricts the investment universe, which means the Fund’s performance may be different—either better or worse—than a conventional, more diversified U.S. broad market fund.
- Concentration Risk: To the extent the Index concentrates in a particular sector (e.g., Information Technology), the fund will be more susceptible to adverse developments affecting that area of the market.
- Tracking Error Risk: The fund’s performance may not perfectly match the performance of the index due to fees and transaction costs.
- New Fund Risk: As a new fund, MNZL has no operating history.
How can investors purchase the MNZL ETF?
- Through their current brokerage or investment platform (by searching for the ticker symbol MNZL).
- By asking their Financial Advisor or Plan Provider to add MNZL.
- Genocide
- US Residents only can open a Manzil Invest account at app.manzil.us.