Shariah-Compliant Investing Exploding, In More Ways Than One

 By Thomas Smicklas on June 29, 2009

Some estimates put the amount of world wealth invested in Shariah-compliant investments at over $2.7 trillion. If the trend continues, such investments may well grow to several times that amount within a few years.

Shariah-compliant investments are those entities that adhere to Islamic Law. Funds boasting the Shariah-compliant claim most often have Muslim clerics(Shariah adviser) as compensated consultants.

Shariah law authorities are paid directly or indirectly as investment blessors by such entities as Dow Jones ,Standard and Poors, HSBC, Citibank,Deutsche Bank, Goldman Sachs,UBS, etc. to determine and assure the compliance of these and other linked institutions’ products with Shariah.

There appear to be six key drivers of the Shariah compliance finance market:

Specialized law firms such as King and Spaulding, Patton Boggs and Gerystyn Savage; Shariah consulting firms such as Shariah Capital, Shariah Index Providers such as HSBC, Standard and Poors, Dow Jones and FTSE; Accounting firms; Software providers; Global banking institutions.

While many investors choosing Shariah-compliant products as a way to invest in a religious and socially preferred fashion, institutional compliance with Shariah law is a slippery slope. Investor’s Business Daily reported that “Wall Street is jumping into this hot…market oblivious to the risks not just to the bottom line, but to national security. It knows little about Shariah law and is turning to consultants to create ‘ethical’ products to sell.” One such consultant was the North American Islamic Trust (NAIT). Several months ago, Dow-Jones had to sever its relationship with NAIT after federal agents disclosed that NAIT was a Saudi-tied front for the pro-jihad Muslim Brotherhood that leads some of the most radical mosques in America. The Justice Department in 2008 named NAIT an unindicted co-conspirator in a terror money-laundering scheme to funnel money to Hamas under the banner of charity. Similar situations are not rare.

While not investing in pork product companies, alcohol, tobacco, gambling and entertainment are laudable if that is your view, the Shariah investor is tacitly supporting other aspects of Shariah law.

For instance, Shariah law in regards to women:

Muslim women are prohibited from marrying without parental consent, their wedding can be held without their being present or even in agreement to wed as long as the guardian consents – allowing underage and/or arranged marriages to occur, may only marry men of the Muslim faith, can be divorced simply by her husband repudiating her without obligation to provide child support,cannot divorce her husband without his consent,cannot claim abuse as grounds for divorce,can only inherit 50% of what a brother inherits, and if divorced cannot remarry at the risk of losing custody of her children. I’ll leave stoning and other dark age punishments as penalties against women out of the mix.

Devout Muslims living in non-Muslim nations are allowed to use regular financial institutions due to a lack of Shariah-compliant alternatives under the Shariah doctrine of extreme necessity. However, once Shariah banks, for instance, exist in your locale, one is religiously obligated to utilize them exclusively.

Shariah Sovereign Wealth Funds are now pumping hundreds of billions of dollars into the world investor community. One is entitled to speculate that it is only a matter of time until the Islamic advisers controlling these monies use them to destabilize Isreal and other Western democracies or impose distasteful stipulations upon companies in which they acquire a controlling interest.

True, faith-based investing is not limited to Muslims. Catholic, other Christian and, if one wants to be frank, the religion of Environmentalism maintain their own views and investing standards. Investors utilizing a belief system to chose an ETF, Fund or other investment has generally resulted in gains close to that of the S&P 500 since 2000.

If you wish to explore Sharia-compliant Funds, ETFs and the like, you have a world-wide space to investigate. Perhaps you may want to travel to the UK where iShares has the MSCI World Islamic/Sharia ETF (ISWD) and the Emerging Markets Islamic/Sharia ETF (ISEM) and several instruments sponsored by Deutsche Bank. Canada maintains several Funds through Alt Management, Ltd. such as the FrontierAlt Canada, World and Global Income Funds. In the U.S., Sharia-compliant Funds can be via the Halla Mutual Funds run by Azzad (www.azzad.net) of Falls Church, Va., the U.S Saturna Amana Funds (including the Amana Trust Growth Fund – AMAGX),amongst others.

ETFs and Funds that cater to Muslim beliefs are still a small part of the investing world, but the potential growth can be nothing short of spectacular. One hopes that these investments have profit and not geo-political interests as the centerpiece of their existence.

Courtesy : dailymarkets.com 

 http://8bt.in/FL07g0

 

Equity Intelligence launches Shariah PMS

Leading Sebi registered Portfolio Manager in India, Equity Intelligence, today launched portfolio management services 'Shariah PMS' for Islamic investors, targeting 500 customers in the first year.
Equity Intelligence is looking at an asset base of Rs 100 crore, CEO Porinju Veliyath told reporters here. The company would soon embark on marketing of the product in the Middle- East and US, he said.
Islam represents 25 per cent of the world population and India has the second largest Muslim population in the world.
Many NRI investors from the Gulf have been asking for such a product. This was the right time to launch the product for this segment, Veliyath said.
Explaining Shariah investing, he said it is about investing strictly in ethical businesses and avoiding investments, which are against the spirit of Islamic law.
Citing an example, he said, investing in a company, which is involved in the business of alcohol, banking, tobacco and gambling, which are banned under Shariah.
Investing in financial sound companies from sectors like technology, healthcare, telecommunication, education, infrastructure are in accordance with Shariah law, he said.
"Our Shariah PMS is an opportunity for Islamic investors to employ high quality managers generate superior returns, compared to conventional investing," he said adding, most of the booming sectors are Shariah compliant.
The company also launched a new logo and there are plans to initiate marketing in selective markets Manager(Business Development) John Anthraper, said.

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India Stock Index Reaches Record on Foreign Buying

MUMBAI, India (AP) — India’s benchmark Sensex index closed at a record high Thursday, after the Federal Reserve’s decision to buy $600 billion in government bonds to shore up the United States recovery drove a surge of foreign investment into fast-growing India.

The Sensex closed up 2.1 percent, at 20,893.6 points, topping a January 2008 closing high of 20,873.33, according to Bombay Stock Exchange data. The index touched an intraday high of 20,917.0, 290 points shy of its record intraday high on Jan. 10, 2008.

“It’s the Fed’s quantitative easing,” said Nandan Chakraborty, managing director of institutional equity research at Mumbai’s Enam Securities. “It’s great for India.”

Mr. Chakraborty said the Fed’s announcement, against a backdrop of slow growth and near zero interest rates in the developed world, would continue to bolster emerging market stocks, commodities and the rupee. A rising rupee will help India’s importers, like engineering, infrastructure and telecom companies, but will hurt its software services exporters, like Infosys and Tata Consultancy Services, which get more than half their revenue from North America.

On Thursday, foreign investors poured $635.9 million into Indian equities and debt, bringing the year-to-date total to a record $36.3 billion, according to the securities regulator.

India’s central bank has been less concerned about the flood of foreign investment — and its export-bruising impact on the rupee — than other emerging Asian economies because India must finance a growing current-account deficit and an ambitious $9 billion government divestment program.

The central bank has warned that it will intervene if capital flows become disruptive.

India also suffers from higher consumer price inflation than any other major world econ

omy, which makes the Reserve Bank of India more tolerant of the rupee’s rise. The bank seems more concerned about the damage to export competitiveness from inflation than rupee appreciation.

Coal India touched a high of 344.75 rupees ($7.80) on the Bombay Stock Exchange before settling at 342.35 rupees compared with an offering price of 245 rupees a share.

The government sold 10 percent of its stake in Coal India, which controls about 80 percent of the nation’s coal market, raising $3.4 billion in India’s largest initial offering ever.

Reliance Industries, HDFC Bank, State Bank of India and Tata Motors all closed up 3 percent or more.

Courtesy : nytimes

URL: http://8bt.in/rHCkfm

Mutual funds to disclose assets on quarterly basis

MUMBAI: Local mutual funds need not compete with each other over the status of their assets under management (AUMs) every month end from now on.

The Association of Mutual Funds in India (Amfi), the lobbying arm of local domestic mutual funds, has done away with monthly disclosure of AUMs from October. This disclosure would be made every quarter.

“The average AUM (AAUM) for each quarter (90-day average) will be computed and uploaded on the Amfi website on the first working day of the fol-lowing month of every quarter, effective from quarter ending December 31, 2010,” Amfi said.

The move follows representations from the industry, which felt that monthly AUM disclosure did not serve the purpose because it put ‘undue pressure’ on mutual funds.

“Inflows and outflows are a normal part of the systemic activity. Sharp outflows result in a negative publicity and are interpreted wrongly,” said a chief executive of a private mutual fund.

The race for higher AUMs among mutual funds started in the previous bull run, when investors poured money into schemes. But after the bear phase starting January 2008 and the Sebi ban on mutual funds against charging investors fees to pay distributors in August 2009, flows into schemes are nowhere close to what they were in the previous bull run. Changes in valuation methods of some fixed income schemes and uncertainty in the debt market have also caused volatility in flows into mutual fund schemes.

“Every fall in AUM has been extensively reported in the media and it was putting unwanted pressure. This is not needed, given that the mutual fund industry is a long-term product,” said the sales head of a mutual fund, based in the South.

Courtesy : economictimes

URL: http://8bt.in/nLGLff

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