May 2000

P.O. Box 1203

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Tel/Fax: (209) 391-4248
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Survey Results: Demand for Islamic Investments in America

Methodology

The following survey was conducted on July 4-6, 1997 at the annual Islamic Circle of North
America (ICNA) conference in Pittsburgh, PA. The survey analyzes the results of 100
respondents.

The ICNA conference is an annual gathering of 10,000 to 20,000 Muslims from all over the
US and Canada to discuss various Muslim issues, get involved in social activities, buy and
sell products, and promote Islamic organizations and products (i.e. Islamic financial
services). The current Muslim population in the US is estimated at 6-9 million depending
on the source.

Respondents were asked to complete a survey of 15 questions to the best of their

knowledge. The survey was divided into three sections; name and address, demographic
information, investment style and preferences. Respondents were not paid or compensated
in any manner. This was probably one of the reasons for a small sample size. Another
reason relates to cultural issues. Muslims, especially from South Asia, are reluctant to share
personal financial information with others. The younger generation and those born in the
US are more willing to share such information.

The survey was originally developed for a mailing campaign but received limited success
due to the above mentioned issues. Face-to-face contact was a better approach.

Given the fact that no other study has been conducted on Islamic financial services in the
US, the following study is considered to be the best available at this time.

Limitations

! Small sample size. Results may not be indicative of the target audience at-large.
! Demographic breakdown of respondents shows a high percentage of students and those
new in the job market (higher than the demographic breakdown compiled by the
American Muslim Council, Washington, DC)
! Some respondents who have limited knowledge of financial services and investments
were hesitant about answering questions relating to their financial knowledge and,
thus, left some questions unanswered. As such, results of some questions may be
based on less than 100 respondents.

Copyright© 1997-2000. Failaka International, Inc. All Rights Reserved

www.failaka.com 1 Demand for Islamic Investments in America

Demographic Analysis

Profession: Profession
Over 59% of respondents came Educator
from professional backgrounds. Doctor 7% Professional
Educator category includes uni- 8% 25%
versity level professors as well
as K-12 educators. There was a Other
high level of students in the 12%
sample size.

The ‘other’ category includes

clerical, blue-collar as well as Self-Employed Engineer
14%
homemaker professions. 19%

Student
15%

Age Breakdown:
Age Breakdown
The largest age group was the
36-55 category which is a prime >55
2% 18-25
investment age group. The >55 15%
age group was underrepresented
which was most likely due to
the cultural issues mentioned in
Methodology.
36-55
49%
Note that the 18-25 category is
representative of the Student 26-35
34%
profession above (15%).

Country of Birth: Country of Birth

The South Asian made up the Other
largest group with over 48% of Bangladesh 5%
the sample size, respondents 7%
born in Pakistan made up 34%. India Pakistan
7% 34%

As the Muslim population con-

Arab Countries
tinues to expand in the US,
12%
through natural growth or mi-
gration, the number of Muslims
born in the US will increase. A
majority of the US born respon- African USA
dents were second generation Countries 20%
Muslims from South Asia and 15%

the Middle East.

www.failaka.com 2 Demand for Islamic Investments in America

Level of Education:
The level of education in the Level of Education
Ph.D.
sample size was impressive. 5%
High School
12%
Over 77% have university de-
grees, of which over 37% have
Some College
post-graduate degrees. 10%

Note, however, that students Masters

currently enrolled in college are Degree
32%
spread across three categories;
high school, some college, and
college degree. A large portion College
of the students in the sample are Degree
41%
post-graduate students.

Household Income: Annual Household Income

Over 17% of respondents’ in-
come was less than $25,000 an- >$85,000 < $25,000
15% 17%
nually, which is reflective of the
15% student ratio.
$65,001-
85,000
Over 55% of respondents have 10% $25,001-
$35,000
annual incomes of over 14%
$45,000.

$45,001-
$35,001-
$65,000
$45,000
30%
14%

Investment Style and Preference Analysis

Level of Investment: Percentage of respondents that said

There was an unexpectedly low they currently invest
percentage of respondents who
said they currently invest.

The definition of investment No

was: ownership of stocks, 41%
bonds, money markets, real es- Yes
tate, ownership in a private 59%
company and retirement ac-
counts (IRA/401K). Ownership
of a primary residence was not
included.

www.failaka.com 3 Demand for Islamic Investments in America

Current types of investments:
Respondents who invest were Current types of investments
asked whether their investments Halal
18%
were Halal (Sharia compliant),
conventional or had a combina-
tion of both.
Both
44%
Over 62% said that they have
Halal only investments or both
which indicates that about two-
thirds of Muslims are concerned
Conventional
with having investments that 38%
are in line with their religious
beliefs.

Breakdown of current types of

Breakdown of investments: invesmtents
Only 27% of respondents said
Other Leasing Funds
that they have mutual funds and Bonds/CDs/
5% 0%
only 8% said that they have Money Mkts Mutual Funds
8%
bonds, CDs, or money markets. 27%
This may suggest that they are Direct
Investments
trying to avoid investments that
10%
are clearly based on riba
(interest). Real Estate
11%
Direct investment includes in-
vestment in private/family busi-
Stocks IRA/401K
ness. 17% 22%

Reasons for not having Halal

Reasons for not having Halal investments
Other
investments: 9%
As expected, over 57% percent Do not provide
of respondents said that they do good return
not have Halal investments be- 11%

cause they can’t find any. Sur-

prisingly, 23% said that they do Can't find any
not seek out Halal investments 57%

because Islamic investments Islamic

investments
and their associated companies lack reputation
lack a good reputation. 23%

www.failaka.com 4 Demand for Islamic Investments in America

Types of Halal investments
respondents would like to Types of Halal investment under
have or would consider if consideration
Other
available: None 5%
A majority of respondents 6%
(43%) said that they would like Leasing Funds
6%
to have mutual funds available
to them, this includes IRAs and
Mutual Funds
pension plans. 43%
Direct
Investment
Over 21% said that they are in- 19%
terested in real estate, but this
also means that they would like
Sharia compliant mortgages Real Estate
21%
rather than real estate
investment vehicles.

Name recognition:
Respondents were asked to identify financial service companies from a list of ten. The
results not only highlight brand recognition among Muslims, but also show the level of
knowledge of financial services in general. As suggested in previous survey results, Mus-
lims tend to be less educated on financial services than the population in the US at-large.
This could be the result of
Name Recognition:
religious beliefs where (Which of the ten companies have heard of before?)
one would rather not in-
vest in fear of violating
religious guidelines or be- Merrill Lynch 26.1%
cause of cultural differ-
ences. In most Muslim Smith Barney 17.2%
countries family plays are
large role not only in the Amana Mutual 16.6%
Funds
social structure but also in
the economic structure.
Oppenheimer 12.1%
Family members tend to
rely on others for financial
well-being and welfare. Morgan Stanley 10.8%
The working generations
support the younger and Goldman Sachs 8.9%
the older generations.
However, as wealth in- Wellington
2.5%
Management
crease and the new gen-
eration joins the labor Stein Roe &
2.5%
Farnham
force, more and more at-
tention is being paid to
Wright Investors' 1.9%
long-term financial plan-
ning. Muslim will un-
State Street 1.3%
doubtedly seek Islamic fi-
nancial services.
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

www.failaka.com 5 Demand for Islamic Investments in America