At Principal, we believe in portfolio diversification. Not just between fixed and equity options or local and global solutions, but between conventional and Islamic investments too. We can offer you the diverse solutions you need to maximise your investment solutions and reach your financial goals.
From Conservative to Aggressive funds, we have a variety of investment solutions to meet your varying needs. Below are just a few to consider.
Aims to provide investors with liquidity and regular income, whilst maintaining capital stability by investing primarily in money market instruments that conform with Shariah principles.
Aims to grow the value of Unit holders’ investments over the medium-term in a Sukuk portfolio with most tenures ranging from 3-10 years as well as to provide regular income.
To grow the value of the Unit holders’ investments over the long term in a diversified mix of Malaysian assets in approved Shariah instruments while providing consistent income.
The Fund aims to achieve consistent capital growth over the medium to long-term.
For a complete look at all available Islamic funds, click here. [Select Islamic Funds and hit the search button]
FAQ on Shariah-compliant investments
1. What are the differences between Shariah-compliant investing & conventional investing?
Islamic investing is governed by Shariah rules and parameters. It is also a form of socially responsible and ethical investing.
Conventional investing, however, is not guided by any Shariah rules and parameters.
2. What are some of the basic Shariah rules and parameters applicable under Shariah investing?
Business activities involving the following are not permissible under Shariah investing:
- Gharar (uncertainty) – Usually observed within derivative transactions such as options and futures.
- Riba’ (interest) – Most common in conventional banking and insurance sectors through their interest-bearing activities.
- Maysir (speculation or gambling) – Any financial gains that may be derived from mere chance and speculation such as through short selling and gambling.
- Unethical activities that are against Shariah principles such as promotion of pornography and firearms.
- Companies with primary business activities violate the core tenets of Islam, including the production, trading, transporting and marketing of non-halal goods like alcohol and pork.
3. What are the investment selection process for Shariah-compliant investment companies?
Two layers of screening are generally applied, namely on the business activity (sector screening) and financial screening:
|Sector Screening||Financial Screening|
4. Can non-Muslim invest in Shariah-compliant instruments?
Yes, Shariah investing is for all individuals regardless of their religious beliefs.
5. How do I gain my returns if Shariah investing does not allow for riba’ (interest), gharar (uncertainty) and various other investment limitation?
Shariah investing should not be dismissed by investors who want to generate the best possible return for their investment. It should be seen as a way of responsible and ethical investing, which allows you to grow your wealth financially without adversely impacting the society and environment. Shariah investing still allows you to build your financial freedom while guided by the Shariah rules and principles.
6. What are the benefits of investing in Shariah-compliant instruments?
Shariah investing promotes ethical and responsible investing. It is generally involving less risk due to the strict screening process and the prohibition of speculation. The growth of the Islamic finance industry especially over the last few decades continues to cater the need for more Shariah-compliant investments options.
7. What is Sukuk and how does it work?
Sukuk is Shariah-compliant bonds or debt securities through which investors participate in the ownership of the issuer’s underlying assets until the Sukuk reaches its maturity date. In other words, Sukuk is the Shariah-compliant equivalent of conventional bonds.
An issuer issues Sukuk, collects proceeds from investors and uses these proceeds to acquire the underlying assets on behalf of the investors. The Sukuk issuer subsequently declares a trust over these proceeds and assets. The investors will receive their proportionate income from the investment periodically during the tenor of the Sukuk, and receive the capital amount invested at maturity date.
8. What is the importance of Sukuk in your investment portfolio?
Adding Sukuk to your portfolio can be beneficial as it may lower your investment risk and help stabilize investors’ overall portfolio against more volatile asset classes like equities. In addition, Sukuk provides steady periodic income across various market and economic conditions.
9. Do I need to pay zakat for my unit trust investments (conventional and/or Shariah-compliant fund(s)?
Yes, Muslims who invest in Shariah-compliant funds are required to contribute 2.5% of their income as zakat if the investment value is equal or greater than the nisab value. Zakat, however, is only applicable for Shariah-compliant investments and income. Income that is derived from conventional funds is to be purified by channeling it to charitable bodies as soon as possible.
The calculation for the zakat amount payable is as follows:
|Zakat amount = (investment value at completion of haul + Investment income, if any) x 2.5%|
Note: In Shariah law, nisab means the minimum amount that a Muslim must have before being obliged to pay zakat.
10. What are the types of zakat entitled for a tax rebate?
In Malaysia, all types of zakat payable on Zakat Al-Mal (Zakat on wealth) and Zakat Fitrah (Zakat on the individual) are eligible for tax rebate on your annual income taxes. A tax refund is a reduction in the actual amount of income tax you have to pay, unlike a tax relief, which simply reduces the amount of your taxable income.
The tax rebate, however, will on be granted to individual tax payers and not corporations.