New investment fund finally launched for devout Muslims

Thanks to the emergence of open-ended investment companies, Muslims now have a fund that can invest in accordance with Sharia.

ORTHODOX MEMBERS of Britain's near two million Muslim community have long had a problem when it comes to investment.

They could invest in the ordinary shares of listed companies that they felt complied with the tenets of the Koran. But the prohibitions against earning interest on any money invested meant that collective investment schemes, such as unit and investment trusts, were mostly out of bounds to devout Muslims.

According to Hamish Archibald, of City Financial Managers: "Under the regulations governing unit trusts, a fund manager has to invest to maximise the returns to shareholders. This means that any cash in the fund has to earn the highest rate of interest that is prudently available." Even ethical funds had no appeal as these fell down on this score. This has meant that in order to have a well-diversified portfolio, a Muslim had to be sufficiently wealthy to invest directly in a portfolio of shares rather than spread risk through pooled funds.

However, with the emergence of OEICs (open-ended investment companies), new funds with a company-type structure that are set to replace traditional unit trusts, this specific regulation is removed. This is the key difference that has allowed such a fund, Al-Safa Investment Fund, to be launched, according to Mr Archibald, whose London-based firm looks after the fund's administration services.

At long last, devout UK Muslims have an authorised fund in which they can invest. Set up as an OEIC, investment management has been delegated to Greig Middleton.

The fund will invest in accordance with Sharia (Islamic religious law). This means it will only invest in a company after the managers decide it meets all the requirements of the faith and that it meets the approval of an independent supervisory board qualified in Sharia.

As well as any interest-earning deposits or stock, there is a long list of other prohibited investments. These include anything to do with banking, life assurance, alcohol, gambling, pornography, any company involved with pork or pork products, and any other company that the supervisory board finds unacceptable. Interestingly, unlike ethical funds, Al-Safa could invest in armament manufacturers.

Brian Tora, the head of Greig Middleton's Asset Management arm, who is also a regular columnist in The Independent, will be selecting the portfolio from companies in the FTSE 350.

"While there are a lot of companies we can't invest in," says Mr Tora, "there are probably 200 or so that fit the criteria from which we can select our shares. We initially want to invest in 25 or so companies, building up to maybe 70 holdings."

How popular the fund will be is difficult to judge. "I think that it is a good start," says Bipen Patel, of Forum Associates, a Bolton-based independent financial adviser. "But selling a fund that invests according to Muslim principles is appealing to a niche market that has no awareness that such a fund exists.

"Much will depend on the supervisory committee's credibility with the community and where they draw the line on investments."

Four members have been appointed to the supervisory committee, all well-known members of the Muslim community and all qualified in Sharia.

They are Dr Sharhawy, a respected member of the Islamic Cultural Centre in London; Mohamed Rafiq, experienced in both banking and finance; Dr Gamal Manna, a professor of Sharia in Toronto; and Dr Abdul Rahman, an imam at Cairo's Al Azhar University.

"It has taken us over three years to find someone to launch a fund that invests in strict adherence with our religious laws," says Ian Thomson of STZ, the London-based Muslim partnership which initiated Al-Safa Investment Fund. "Greig Middleton was recommended as they are the country's leading private client stockbroker and a well-known fund-management group."

Minimum investment in Al-Safa fund is pounds 1,000, or pounds 50 per month. It has an initial charge of 5.3 per cent and an annual charge of 1.75 per cent. As the initial offer period closes on 29 March, units are being created on application, so it can be used for a PEP if applications are received before the end of the financial year. Otherwise it can be included in an Individual Savings Account after 6 April.

Contacts: Greig Middleton on 0171-655 4000; City Financial Managers on 0171-556 8800; Forum Associates on 01204 433755

Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebookA delicious collection of 50 meaty main courses
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Massage Therapist / Sports Therapist / Physio / Osteopath

    £12000 - £24000 per annum: Recruitment Genius: An opportunity has arisen for o...

    Recruitment Genius: Account Manager / Sales Executive - Contract Hire

    £35000 - £60000 per annum: Recruitment Genius: This industry leader provides c...

    Recruitment Genius: Project Coordinator

    £28000 - £30000 per annum: Recruitment Genius: A Project Coordinator is requir...

    Recruitment Genius: Area Sales Manager - Midlands

    £20000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Day In a Page

    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
    UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

    39.8 degrees recorded on Tube

    There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
    Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

    Computerised cooking is coming

    From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
    Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

    Jessie Cave's feminist cartoons

    The Harry Potter star tells Alice Jones how a one-night stand changed her life
    Football Beyond Borders: Even the most distruptive pupils score at homework club

    Education: Football Beyond Borders

    Add football to an after-school homework club, and even the naughtiest boys can score
    10 best barbecue books

    Fire up the barbie: 10 best barbecue books

    We've got Bibles to get you grilling and smoking like a true south American pro
    Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

    Nick Bollettieri's Wimbledon Files

    Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
    Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

    ‘This is one of the best McLaren teams ever – we are going to do it’

    Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most