Helpful Hints

• The truth is the smaller investible universe does not result in performance drag. Due to the Shariah screening process, the Islamic investing approach can result in a portfolio that is more stable and less volatile, compared to the larger conventional investible universe.
• A sound and diversified Islamic global equity portfolio averaging 150 to 200 constituents can be constructed using the 2,413 components of the Dow Jones Islamic World Index, which exhibits an impressive market capitalization value of USD18.35 trillion.
• Islamic investing practices fair distribution of wealth to inhibit profiteering and mitigate overly greedy behavior, which highlights the importance of dealing with justice to all contracting parties in a transaction.
• It is also a matter of shifting perception. For example, Malaysian McDonald’s restaurants serve burgers just like any other fast-food restaurant, only the burgers happen to be halal. Similarly, Islamic investment products are valid alternative investment solutions that just happen to be Shariah compliant.
• Shariah investment products are priced the same way as conventional investment products. For example, Islamic funds on the UCITS platform in both Dublin and Luxembourg charge management fees ranging from 150 to 225 basis points, just like those of conventional UCITS funds.
• Since the practice of Islam is derived from four different schools of thought, or mazhabs, the better approach is to harmonize the different Shariah interpretations, as opposed to picking one mazhab’s Shariah interpretation as the de facto international standard.
• Shariah principles discourage excessive loss in any transaction, and as such, hedging activities are encouraged if they can reduce this excessive loss through Shariah contracts such as wa’ad (promise) and salam (forward sales).
• With the myths demystified, the benefits of Shariah investing become apparent because it exercises prudence and focuses on fundamentals. With an increasing interest in ESG and SRI investing, Shariah investing can be developed in an integrated fashion to further enhance the ethical robustness of ESG and SRI in line with their specified values.