SAFE BANKING: Muslims can rely on banking which does not conflict with their faith. Picture: AFP
The introduction of Sharia funds may not necessarily be a new concept in South Africa.
A number of South African banks and investment houses offer financial services products which comply with Islamic law.
Old Mutual Unit Trusts, in partnership with Al Baraka Bank and Channel Islam, has launched a Sharia-compliant asset allocation fund that promises to offer investors excellent diversification through access to most local and international asset classes.
Saliegh Salaam, portfolio manager at Old Mutual Investment Group South Africa (OMIGSA), who manages the Old Mutual Albaraka Equity Fund, has 15 years of investment experience and is joint head of OMIGSA’s Quantitative Investments boutique, will manage the Old Mutual Albaraka Balanced Fund. Sharia-compliant investing is about abiding by Islamic principles. “These include avoiding the paying and receiving of interest, and investments into companies involved in alcohol, gambling, non-halaal food products and media,” says Salaam.
Income deemed to be non-permissible is paid to a charitable trust elected by the Sharia Supervisory Board. Non-permissible income does not form part of the investor’s income. Salaam says one of the new fund’s key advantages is that “by investing across many asset classes, rather than only local equities, it gives investors additional security through diversification. Added diversification comes through its ability to invest in other unit trusts”.
“The Old Mutual Albaraka Balanced Fund is suited to investors seeking long-term growth and a steady income who want to access opportunities in the local and global markets, but at reduced risk.
“The fund also offers a moderate level of income through a portfolio that diversifies across asset classes. Investors gain access to both local and international asset classes including equity, liquid assets and permissible non-equity securities,” says Salaam.
“The fund may also invest in the portfolios of other unit trusts, both locally and those registered in countries with acceptable regulatory environments and approved by the Sharia Supervisory Board. International equity is a popular asset class among both local and foreign investors. Muslim investors across the country can be assured of the rigorous criteria and transparency of the Old Mutual Albaraka Balanced Fund,” he says.