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Shariah Investments & Ethical Investing

At first glance, Shariah investments can appear to be quite complex. These assets contain various rules and limitations based on the Islamic faith that governs over all aspects of Muslim life.

These principles state that for any financial service or institution to be considered halaal, their products must adhere to these specific values of social responsibility set out in the Quran. These values speak to transparency, fairness, and accountability.

We are here to help you understand more about the importance of Shariah investments and ethical investing, what options are available to you, and how we can help.

Shariah Investments: An Introduction

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The Kagiso Islamic High Yield Fund is just one example of an Islamic investment fund that is Shariah-compliant. This fund provides both capital stability and ethical transparency at moderate levels of risk. It also gives much-needed variety to today’s available range of Islamic finance products.

Shariah-compliant investment is different from conventional investment funds. In your traditional investment fund, investors expect to accrue interest over some time, however, in Islamic investments, interest (‘Riba’) is prohibited.

Instead, customers and banks invest and share in profits equally. The risk is shared and thus the impact is lessened, which makes these funds far less volatile than your ordinary investment fund.

It’s important, as an Islamic and Muslim investor, to make use of Shariah-compliant companies when establishing your Shariah portfolio. These companies must adhere to the standards set out by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This body ensures that Islamic investment products maintain Shariah values across all their financial services.

Contact us to find out how you can ensure Shariah compliance throughout all your investments.

Shariah Investments: Importance

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As this industry continues to grow and develop, it becomes vital to share with all of our clients the value and benefits of Shariah investments. In recent times, these funds have gained popularity with other groups outside of the Muslim faith. This is because of a recent surge in the demand for ethical products.

Groups of all faiths, and non-faiths alike, share similar values with Muslim investors when it comes to seeking socially responsible investment solutions, which adhere to environmental, social, and governance (ESG) criteria.

This is what makes Shariah-compliant investing appealing for Muslim investment and beyond. It’s not only beneficial to the Muslim community, but also the rest of the modern world as it caters to these shifts in moral codes and spiritual values.

This is why ethical investing is becoming more prevalent and sought after. Ethical investments provide investors with the ability to generate profits from their invested funds while still ensuring that their moral compass is pointing in the right direction!

Shariah Investments: Requirements

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For a fund to be considered Shariah-compliant, it must adhere to the rules set out by the AAOIFI (as guided by the Islamic faith). This organisation helps to ensure the ‘standardisation and harmonisation of international Islamic finance’. It is a guiding body that tries to create uniformity across all Islamic financial sectors.

Within each investment organisation, there must exist a Shariah Supervisory Board, which directs and monitors all Shariah-compliant funds. This ensures financial products are lawful for Muslim consumers.

These boards and regulators allow investors from the Islamic faith to better screen potential new investment opportunities, ensuring these match the rules of their faith.

Shariah Investing: Restrictions

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The Shariah supervisory boards and regulators also regulate financial product restrictions and allowances.

Products are not considered Shariah-compliant if they derive majority income from: 

  • Alcohol, tobacco, and pork
  • Production of weapons of mass destruction
  • Conventional financial services and leisure/media
  • Pornography and gambling

Shariah-compliant products include:

  • Equity funds
  • Real estate funds
  • Commodity funds
  • Bonds

The restrictions are wide-ranging and subtle in some cases. As a result, the lines can blur between what is considered Shariah-compliant and what is not. 

It can be a confusing experience to try and navigate Shariah compliance and Islamic investment products alone. As a Shariah-compliant company, our financial advisors are highly knowledgeable about Shariah investing. We can assist you to secure the right funds for your ethical requirements.

Please do not hesitate to get in touch to find out about Shariah investments and ethical investing.

+27 11 839 2302

1024 576 Maysure Financial Services

The Kagiso Islamic High Yield Fund: What you need to know

Kagiso Asset Management recently launched the Kagiso Islamic High Yield Fund. Kagiso delivers consistent performance for those who wish to invest in Shariah funds and hold the best performing Shariah investment to date.

Their global performance track record is ahead of international benchmarks, so when they make new investment options available it’s developed by their well-established investment team who have the experience needed to create funds that matter.

But what is high-yield fund?

When investors are looking for yield on their investment, it means that they are looking to make an income from what they invest. High-yield-funds pay above-average returns on the initial or ongoing investment.

So why are Kagiso releasing another fund?

Research indicates that Shariah investors are risk-averse and seek capital protection. This fund aims to provide a stable income at low capital volatility, making liquidity and quarterly income distribution far more attractive to investors.

Kagiso sees the value in growing their Shariah assets and aim to create a combined value of R160 billion for investors to tap into. They believe that two funds are not enough for the current market and aim to fulfill the need of retiring investors with funds that work for them.

What makes this fund and Kagiso different is that they provide a maximum yield over long periods of time, there is no exposure to volatile forex, there is a prudent allocation to property as well as other investments.

In the South African Shariah space, there are only a few fund managers offering fixed income return Islamic funds and this fund will add much-needed variety in choice of providers. This fund will also allow for more diverse investment portfolios to be provided for our clients.

They aim to give investors what they truly want, capital preservation, and real income and liquidity.

The minimum investment into this fund is a R5,000.00 lump sum or a R500.00 monthly debit order.

For more information about this fund contact us:

? 011 839 2302