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The Muslim 60-40, revised: unlevered single-family housing as the '40'
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WHAT CHANGED FROM VERSION 1
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Three corrections, each of which moved the answer:
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 1. THE YIELD NOW FLOATS. Version 1 fixed the net yield at 5% for 50 years. This version measures the
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 gross rent yield of a prudent high-yield metro basket and lets it move with rents and prices.
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 The result: a net yield averaging 3.70%, ranging 2.59% to 4.44%. It is never 5%.
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 2. APPRECIATION IS EQUAL-WEIGHTED, NOT VALUE-WEIGHTED. A value-weighted national index loads onto the
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 large coastal metros that drove the 2006-11 collapse. Over 2007-11 that index fell 26.2%; an
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 equal-weighted index of all 410 metros fell 13.9%; the 39-metro basket fell 5.2%.
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 3. EVERY SLEEVE IS NET OF FUND FEES. Conventional index funds on the benchmarks, and Wahed's own HLAL
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 expense ratio of 0.50% on the Shariah equity sleeve.
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 NET EFFECT: the Muslim 60/40's advantage over the classic 60/40 falls from +1.11 points a year to +0.05. See the Attribution sheet.
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HOW TO USE IT
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Inputs are on 'Assumptions', in blue on yellow fill. The portfolio sheets are live formulas. The two
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inputs that decide the answer are the operating cost load and the good-neighbourhood yield discount.
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SHEETS
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 Assumptions every input, including the fund fees and the prudent-buyer adjustment
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 Basket the 39 metros, their measured gross yields and their 20-year real price growth
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 Market data downloaded series: equities, treasuries, three home price indices, rents, CPI
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 Yield build-up gross metro yield -> what a prudent buyer nets, year by year
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 A / B / C the three portfolios, year by year
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 Summary headline table computed from those three sheets
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 Attribution where version 1's advantage went, one correction at a time
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 Sensitivity the operating cost load, which is what the answer actually hinges on
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 Sources provenance for every series
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THE THREE THINGS TO KNOW BEFORE QUOTING ANY OF IT
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 1. THE MARGIN IS NOW INSIDE THE ERROR BARS. The break-even flat net yield is 3.57% against a
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 measured average of 3.70% -- a margin of only +0.13 points. Raise the operating cost load by half a
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 point and the classic 60/40 wins. This is no longer a robust return advantage; it is a tie.
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 2. THE BASKET IS SELECTED ON TODAY'S YIELDS, which is a look-ahead. Selecting on high current yield
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 picks metros whose prices lagged, biasing measured appreciation DOWN (conservative). Screening out
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 metros with weak 20-year real growth biases it UP (optimistic). The two partly offset, but this is
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 not a clean out-of-sample backtest and should not be presented as one.
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 3. NEIGHBOURHOOD QUALITY IS BELOW THE RESOLUTION OF THE DATA. 'Good neighbourhoods, no Section 8' is a
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 sub-metro decision. Metro-level data cannot see it. The model applies a flat discount to the metro
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 gross yield to stand in for it, and that discount is an assumption, not a measurement.
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This is historical analysis, not investment advice, and not a forecast. It is not a Shariah opinion.
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