Hejaz High Income ETF trails benchmark despite a 65% rise in net assets

Performance gap overshadows asset growth

Hejaz High Income Active ETF (ASX:HJHI) added money faster than it added investment returns in the year to 30 June 2026. The Sharia-compliant dividend-focused fund reported a 3.74% net return, compared with a combined benchmark return of 13.93%.

The result is the central fact in the annual report. Fund profit fell to $219,437 from $436,646 a year earlier, even as net assets climbed from $5.85 million to $9.64 million. Applications contributed $4.41 million during the year, while redemptions totalled $616,833, making flows a much more important driver of the balance-sheet growth than the reported investment result.

Benchmark changed midway through the year

The performance comparison carries an important qualification. HJHI switched from the DJI Islamic Market Global Select Dividend Index to the S&P Global 1200 Shariah Low Volatility High Dividend Index on 11 February 2026, so the 13.93% combined benchmark figure spans two benchmark regimes rather than a single uninterrupted index.

The report does not provide a detailed attribution of the shortfall. It shows dividend and distribution income of $251,561, net gains on financial instruments of $128,048 and transaction costs of $41,095. Management fees and costs rose to $375,640, although the fund also received a $297,822 reimbursement designed to keep overall management fees and costs within the amounts disclosed in its product documents.

Distributions rise despite lower profit

HJHI paid or accrued $229,712 in distributions for the year, equivalent to 2.5643 cents per unit. That compared with $148,414, or 2.7212 cents per unit, in the prior period. The higher dollar distribution came as the unit base expanded: units on issue increased to 8.97 million from 5.52 million.

The fund held $8.22 million in listed equities at year-end, representing 85.4% of net asset value and the key focus of Deloitte’s audit. It also reported a $214,237 liability on forward currency contracts, including a $9 million notional position used primarily to hedge foreign-exchange exposure on non-Australian dollar securities.

Concentrated ownership remains a feature

One investor, Hejaz Global Ethical Fund, held 96.28% of HJHI’s units at 30 June 2026, according to the related-party disclosures. That concentration is material for a listed ETF: the fund’s size and trading characteristics remain heavily influenced by the applications and redemptions of a closely related scheme, rather than by a broad retail holder base.

Deloitte issued an unqualified audit opinion, and the report identified no subsequent event materially affecting the fund’s financial position. The more consequential unanswered issue is operational rather than accounting-related: whether the change in benchmark will be followed by a better relative performance record, and whether future asset growth can come with a wider and more independent investor base.