For our Muslim investors it’s essential that all income adheres to the strict dictates of the Shariah – earnings should be pure and choice. This is why Sanlam Private Wealth has introduced a South African first – a customised investment solution that complies with the Shariah guidelines.

As well as setting out rules concerning income, the Shariah guidelines also prohibit financial involvement with companies such as conventional banks, casinos and alcohol producers. Another key element of Islamic investing is the avoidance of interest, or Riba.

To ensure Shariah-compliant investment, it is essential to engage with an investment adviser of faith, with the necessary experience and industry expertise. We bring clients a solid combination of certified Shariah compliances, and the impressive track record of a world-class company.

Shariah investment process

To qualify for inclusion in our Shariah solution, all investments are thoroughly evaluated:

Review fund products

  • Determine whether the trading universe fits within the categories of Shariah-compliant businesses and companies
  • Assess whether the portfolio is managed using only equities and a limited core of acceptable financial instruments.

Assess financial ratios

  • Interest-bearing debt-to-total assets must be less than 30%
  • Non-permissible income must be less than 5%
  • Liquid to non-liquid cash holding must be less than 70%.

Check interest rate

Riba-earned plus non-permissible income must be less than 5%.

Determine qualification for fund universe

The above steps determine qualification.

Assess investment potential

This involves an in-depth analysis to assess the investment potential.

Conduct Shariah audit and income purification

  • The Shariah Board reviews the company to assure it adheres to Shariah rules (Shariah Certificate)
  • Monthly audits are conducted to ensure non-permissible income is not reinvested
  • The dividend is purified of interest and non-permissible income.
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