Our mission at Falah Capital, Inc. is to promote our Exchange Traded Funds (ETF) business as a cost-effective and efficient means of Socially Responsible Investing (SRI) in the United States. While this is one of fastest growing forms of themed investing with over $15 trillion in assets. It has yet to make its mark in the ETF space.

We believe this is because ETFs are predominantly Index trackers, and SRI Indexes tend to underperform the broader market.

Additionally, ETFs carry much lower management fees than mutual funds, which are the primary investment vehicle in the SRI space. Making it difficult from a financial perspective for an SRI Manager to create a lower cost ETF that may have trouble matching the performance of the broad market.  

The iShares ETF and Calvert Fund are both constructed from largest companies in America.  Both have a matching track record and similar a weighting methodology, but vastly different returns and cost structure. Amounting to a 40% performance difference since the year 2000.

The Calvert Fund goes through screening to remove unethical companies from the pool that, gives their Index allocation about 30% fewer stocks than the iShares ETF.  

Making SRI Index investing match the broad market is our goal.

In the United States, there is more than $4 trillion in assets spread through, roughly 1,000 investment tools available within the ESG framework (Environmental, Social Responsibility, and Corporate Governance).

Globally, this industry has over $15 trillion in assets under management.  That is in a combination of funds, managed accounts, community pooled initiatives, and even retirement annuities.

As Falah Capital follows exclusionary screening criteria. We are more accurately in line with SRI that places restrictions on investing in producers of products such as alcohol and tobacco. 

In this sector, at last count there were 445 investment vehicles in the U.S. with $1.76 trillion in assets. Most of which is in actively managed mutual funds. 

However, there are less 10 ETFs in this space with just $1.27 billion in assets (including our ETF: FIA), which represents a significant opportunity to grow our customer base. Through our efficient, cost conscious Indexing methodology.

The U.S. ETF industry has over $2 trillion in assets and continues to grow steadily month by month.  

We feel that the charted products are our core competitors in the SRI space. As a whole, they combine elements that are present in our offering.  Some are ETFs, others mutual funds with and without quantitative filters. Or third-party auditors to ensure investment activities are carried out as planned.

Considering, that our ETF platform is ethical, risk-averse, low in cost, and maintains external oversight.  It is our expectation that it will gain a great deal of support in the U.S. and abroad.

Costs that most SRI mutual funds include:

• Management Fee:  An annual fee that the investment manager receives from deploying and monitoring the funds assets.
• Front Load: A commission charge applied at the time of the initial purchase for a mutual fund.  It is deducted from the investment amount and, as a result, it lowers the size of the investment.
• Back Load:  A commission charge applied during the sale of a mutual fund. The fee percentage is generally highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.
• Redemption Fee: A commission charge applied to short-term owners in a mutual fund for particular time periods, commonly 30, 180, or 365 days.
• 12B-1 Fee: An annual administration, marketing, and incentive paid to distributors. It is considered an operational expense to increase assets.

Falah Capital is a rules-based investment company. We forged strategic partnerships with IdealRatings and FTSE Russell. To launch our first in a series, of Index-based, Exchange Traded Funds listed on the New York Stock Exchange. 

The Falah Russell-IdealRatings U.S. Large Cap ETF (Ticker: FIA) was launched in late 2014.

Our strategic partners have given us the ability to create ETFs that follow a clear set of dependable SRI rules. That places a premium on defining a company's risk characteristics. 

These quantitative rules are designed to remove companies with a high degree of debt, not enough income producing assets, and those that do not put their cash to work to expand their operations or increase their staff.

IdealRatings is a technology firm that screens listed companies around the world. Screening is a continual process to evaluate company activities and balance sheets. As shown in the Apple report below. To coincide with Falah Capital's investment rule book.

FTSE Russell uses the findings from IdealRatings to create our rules based Index (a variant of the Russell 1000).  The holdings within the Russell-IdealRatings Indexes may change on a quarterly basis.  Meaning the Index adds and or removes companies based on their activities over the previous 12 months.  Allowing our ETF to always hold the most appropriate stocks.

This methodology applies to SRI, Ethical, and Islamic investors.  These factors are the bedrock of the Russell-IdealRatings Indexes.  The result is that Falah Capital ETFs promote social justice and have the ability to outperform the broad market (since Russell-IdealRatings Index creation in 2006).

Use of Funds

• We will redesign our website to focus more on SRI themes.
  • 1-2 months
• We will enhance our marketing materials and online adverting initiatives.
  • 1-2 months
• We will concentrate on creating distribution networks in the U.S., Asia, and Arabia.
  • 3-6 months
• We will strengthen our capital position, which will help us form a joint venture with a leading bank in Saudi Arabia.
  • 3-6 months

ETF Revenue Model

• We charge a flat fee of .70% that is based upon the average daily assets in the ETF over the course of a month.  
• Our platform has variable, and fixed costs that give it the ability create more ETFs with economies of scale as assets go up.  
• The breakeven point and profitability on our current ETF begins after $38-million in assets under management has been reached.
• After profitability, on the ETF level. The profit margin should be between 35-40%

• http://www.etf.com/sections/etf-strategist-corner/putting-social-minded-investing-focus
• http://www.bizjournals.com/seattle/morning_call/2015/07/this-new-seattle-company-helps-muslim-tech.html
• http://muslimmatters.org/2015/09/17/portfolio-investment-options-for-muslims-in-the-united-states  
• http://www.russell.com/documents/indexes/research/russell-ideal-ratings-islamic-us-large-cap-index.pdf