Blog: You, us, everyone

Principles of Islamic finance encourage the undertaking of business risks in return for reward. The underlying principle that generates the rewards should be equal to the level of risk taken. The funds available can be allocated for “lawful” projects, and as a result, the undertaking should result in a profit. The Islamic finance principals discourage leaving the funds inactive.

Islamic finance has a large array of opportunities:

• Companies that are included in sharia compliant stock indices such as

1. DJIM Titans 100, S&P Shariah Sub-Indices
2.  Stocks baskets selected from DJIM /DJIM BRIC indices / S&P Shariah Sub-Indices
3. Islamic mutual funds (case by case due to dealing cycle)

• Commodity indices and commodities: All tradable commodities or commodity indices respecting the following criteria:

1. No futures
2.  Precious metal and oil spot transactions
3. Not compliant are indices that are calculated on a forward basis and pork-related commodities and futures.

Cash

• Foreign exchange and rates

1. FX spot treated as Islamic compliant

• Islamic credit linked transactions

1. Sukuk linked certificates with a basket (>5 names). No smaller basket sizes and no single name underlying structures.
2.  Synthetic CLN is possible, but the reference entity must be an Islamic name

We believe that combining sharia-compliant opportunities and socially responsible investment (SRI) factors offers investors a better reward than when they are applied individually. The sharia-compliant universe includes about 3’000 entities from across the globe.