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Azzad Ethical ADJEX Sustainability

| Quantitative rating as of

Sustainability Analysis

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Sustainable Summary

Azzad Ethical Fund has a number of positive attributes that a sustainability-focused investor may find appealing.

This strategy has an above-average Morningstar Sustainability Rating of 4 globes, indicating that the ESG risk of holdings in its portfolio is relatively low compared with those of its peers in the US Equity Mid Cap category. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.

One key area of strength for Azzad Ethical Fund is its low Morningstar Portfolio Carbon Risk Score of 6.8 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy. Currently, the fund's involvement in fossil fuels is negligible, and compares favorably with 4.32% for its average peer. By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, and small arms. The fund fulfills this goal by having negligible investment exposure to each of these activities.

The fund has no exposure to high or severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that may negatively affect stakeholders, the environment, or the company’s operations.

One potential issue for a sustainability-focused investor is that Azzad Ethical Fund doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes.

ESG Commitment Level Asset Manager

An ESG Commitment Level Asset Manager rating is not assigned to this investment.

Morningstar analysts award an ESG Commitment Level Asset Manager ratings to investments that also receive Morningstar Analyst Ratings. Not all investments currently have Asset Manager rating. Morningstar is expanding its coverage, prioritizing investments that are most relevant to investors.