URUS bersama Suraya | 5 Types of Shariah-Compliant Investments for Muslims
Muslims in Malaysia have more than ample choice when it comes to investment options in Malaysia—there are so many Shariah-compliant financial products and services we can choose from.
What is considered Shariah-compliant and Shariah non-compliant?
According to Bursa Malaysia, companies will be deemed as Shariah non-compliant if they are involved in the following core activities:
- Financial services based on riba (interest).
- Gaming and gambling.
- Manufacture or sale of non-halal products or related products.
- Conventional insurance.
- Entertainment activities that are non-permissible according to Shariah law.
- Manufacture or sale of tobacco-based products or related products.
- Stockbroking or trading of shares on Shariah non-compliant securities.
- Other activities deemed non-permissible according to Shariah law.
It is important to remember that the term ‘Shariah’ is not black and white—not as easy as labelling an investment as halal (permissible) and haram (non-permissible). Local context, as well as interpretation, may also apply, and institutions and organisations such as Bank Negara Malaysia, Securities Commission and International Centre for Education in Islamic Finance (INCEIF) continually expand on the knowledge and application of Islamic Finance for the betterment of the ummah.
#1 - Shariah-Compliant Unit Trust and Mutual Funds
These agencies listed below are considered Shariah-compliant:
- Tabung Haji is fully Shariah-compliant.
- Amanah Hartanah Bumiputera (AHB) is fully Shariah-compliant.
- Amanah Saham Bumiputera (ASB) received the ‘harus’ fatwa from the National Fatwa Council.
- EPF allows depositors to switch to Shariah account (you can do this via the EPF i-Akaun portal).
- Unit trusts from various fund management companies which include ‘Shariah’, ‘Islamic’ and/or ‘sukuk’ (Islamic bond) in the fund name.
#2 - Shariah-Compliant Stocks, Indices, ETFs and REITs
It is easy to find Shariah-compliant equities to invest in. Bursa Malaysia’s Bursa Suq Al-Sila’ page provides a list of:
- Shariah-compliant Stocks (i-Stocks).
- Shariah-compliant Indices (i-Indices).
- Shariah-compliant Exchange-Traded Funds (i-ETFs).
- Shariah-compliant Real Estate Investment Trusts (i-REITs).
All of the above investment options are managed by Bursa Malaysia Islamic Services Sdn. Bhd. (BMIS), a wholly-owned subsidiary of Bursa Malaysia which is regulated, transparent and fully Shariah-compliant.
You can also find a list of Islamic Brokers, from which you can get the investments, on the same page.
#3 - Fintech Platforms
Nowadays, there is Shariah-compliant fintech (combination of financial and technology) platforms. Two examples are:
- Wahed Invest - a Robo advisor platform originally from New York.
- Best Invest - a ‘Robo-intelligent’ platform by BIMB Investment, a Bank Islam subsidiary that also focuses on sustainable investing (ESG investing).
Both options are excellent for Muslim investors who want to diversify their investments easily as they can guide and suggest various portfolios suitable to one’s risk appetite. They also have very affordable fees.
#4 - Fixed Deposit
It’s very easy to identify Shariah-compliant fixed deposits in Malaysia. All you have to do is make sure the fixed deposit name ends with ‘-i’.
#5 - Assets
There are various types of assets that Muslims can invest in and profit from capital gain and/or dividend and/or revenue. Some examples include:
- Gold - Historically, Islam and Muslims hold gold in high regard.
- Property - House or land.
Some types of assets may have conflicting fatwas depending on their usage. For example, there are various fatwas on cryptocurrencies, with some fatwa councils in some countries issuing the haram ruling, while others giving guidelines on cryptocurrency zakat (thus implying permissibility).
Therefore, fatwas must be taken into context - for example, cryptocurrencies may be viewed as haram if used for overly speculative or risky activities, such as trading with leverage. In these cases, it is wise to refer to guidelines on Islamic finance.
Islamic Finance Guidelines to Follow
In Islamic finance, Muslims are encouraged to avoid elements of:
- Riba – Interest.
- Gharar - Uncertainty, speculative.
- Maysir – Gambling.
Besides referring to guidelines from Shariah Advisory Councils and Islamic fatwa-issuing bodies, Muslims could also apply common sense and factors in the overall context while investing.
For example, using one’s life savings to invest in just one stock based on a rumour would be considered speculative—bordering on gambling—even if it is a Shariah-compliant stock, and therefore not encouraged.
In another example, even if assets like gold and property are Shariah-compliant, the assets will be considered haram if they are obtained via illegal or unethical means, such as stealing, the money gained from corruption, taking bribes, gambling, alcohol, human trafficking, and other similar activities.
Lastly, you should also know that there is zakat on investments that are applicable to all Muslims if they fulfil the requirements. To learn more, please consult your state’s zakat collection bodies.
This article is contributed by Suraya Zainudin—writer, speaker and digital marketer for one of Malaysia’s top personal finance websites.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of Credit Counselling and Management Agency (AKPK).