Aim: Growth by investing globally in equities that adhere to the Islamic principals of Shariah
Minimum investment: Subject to negotiation
Investment split; 100% global equities that adhere to the Islamic principals of Shariah
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7203 3333
The Swip Islamic global equity fund is aimed at British Muslims who want to invest without compromising their religious beliefs. It adheres to the principals of Shariah, which forbid investment in companies involved in industries such as gambling, pornography, the production of pork and alcohol. The capital structure of the underlying holdings must also fall within Islamic guidelines as interpreted by a panel of Islamic financial scholars.
1st Ethical London manager Harris Bokhari specialises in Shariah compliant investments. He feels that this being named the ‘Islamic global equity fund’ requires creditability and confidence in regards to the fund’s compliance with Shariah law.
“With just under two million Muslims in the UK, this product has tapped into a unique and high-net-worth community. Traditionally, the Muslim community has not been confident with non-Shariah compliant investments and has sought to invest in personal property holdings, or leave their savings in the bank not accepting interest. This unique product has entered into a niche market which for the first time gives an option to invest in equity within an Isa wrapper.,” says Bokhari.
In Bokhari’s view, Islamic scholars including Dr Imran Usmani, one of the world’s leading Islamic finance scholars, give that creditability to the fund to ensure clients are investing their savings in accordance with their faith. “The creditability of these scholars is paramount to give confidence to the market that their investments are complaint with their faith and not merely a marketing exercise,” he says.
Assessing the possible drawbacks of the fund Bokhari says: “The product is designed for long term capital growth. There are only a limited number of companies the fund can invest in, therefore this will increase the risk profile compared to the average equity based fund.” He notes that if the selected companies perform well, the returns will be substantial. However, if they underperform, the lack of alterative investments means the fund will suffer a significant loss.
Bokhari says there are no other Shariah complaint equity fund competitors within the Isa market. “However, once this product is accessible via a pension wrapper, the obvious alternative would be the HSBC Islamic equity fund,” he says. The other alternative to the Isa route would be a number of savings accounts with the Islamic Bank of Britain and Shariah compliant property-based investment funds.
Bakhari concludes: “This is an encouraging and welcome move to help provide investment vehicles for the Muslim community. However, to ensure that this fund has appeal to all ethical investors will depend on the fund’s performance in the years to come.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average