Sharia law is a religious law forming part of the Islamic tradition and derived from the religious precepts of Islam, the Quran and the Hadith. Sharia literally means “the clear, well-trodden path to water”. It acts as a code for living that all Muslims should adhere to, such as prayer, fasting and donations to the poor, and it helps Muslims to understand how they should lead their lives according to God’s wishes.
Sharia investment is becoming an investment choice that is more and more common in the UK, but the options still remain limited. It is sometimes thought of as being an extension of ethical and environmental, social and governance (ESG) options but there are a number of additional investment requirements that fund managers must pay special attention to in order to ensure their funds become, and stay, compliant with the comprehensive set of rules laid out in Sharia law. There can also be other requirements such as having a Sharia ‘audit’ and purifying certain types of income, such as interest income, by donating it to charity.
Our investment team follow a rigorous process when selecting funds for the TAM Sharia portfolios, conducting extensive research into the universe of Sharia-compliant investments. This includes one-on-one meetings with fund managers followed by detailed desk-based analysis looking further into the fund’s investment process, portfolio positioning and performance.
The concept of investing in a Sharia-compliant manner takes considerable effort to implement since managers must pay additional attention to their portfolios and funds becoming, and staying, compliant with the comprehensive set of rules and requirements laid out in the law. For example, Sharia investments must exclude investment opportunities or funds that derive a majority of their income from selling alcohol, pork products, pornography, gambling, military equipment or weapons. There can also be other requirements such as having a Sharia ‘audit’ and purifying certain types of income, such as interest income, by donating them to a charity.
Sharia equities
Sukuk bonds
Sharia-approved commodities
Cash
Companies that provide Islamic financial services
Government debt
Companies that provide interest related services
Alcohol
Tobacco
Pornography
Gambling
Pork
WeaponsOur Sharia service provides investors with a range of Islamic investment portfolios designed to protect and grow your wealth in a Sharia-compliant manner.You can Invest directly or via an ISA, Junior ISA, Pension, Trust or Bond and our Adviser will be happy to run through these different options with you.
We offer five risk-graded Sharia compliant portfolios that span the risk spectrum from more defensive, lower risk returns, through to higher risk, equity-based investment returns.
Sharia Defensive seeks to generate modest returns higher than cash in the bank over the medium term with potential for consistent though constrained capital growth.
Sharia Cautious seeks to generate modest capital growth higher than bond-based returns over the short to medium term by employing a more cautious investment strategy than Sharia Balanced.
Sharia Balanced seeks to generate capital growth over the medium to longer term, with the aim of riding out short-term fluctuations in value.
Sharia Growth seeks to generate higher capital growth over the medium to long-term by employing a more dynamic investment strategy.
Sharia Adventurous seeks to generate strong capital growth over the longer term and can experience frequent and higher levels of volatility than Sharia Growth.
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The team will only select a fund that has proven to deliver on its Sharia-compliant mandate, adhering to the stringent and comprehensive investment process which screens stocks to ensure only companies with Sharia-compliant business or activities are included. The level of diversification within our TAM Sharia portfolios is dependent on the availability of funds that are considered Sharia-compliant. Due to the strict nature of Sharia investments, the universe of compliant funds is limited, tending to give rise to higher weightings of up to 25% in each individual security.
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