Islamic Funds: Safe Stocks

Selemat Hari Raya Aidilfitri to all Muslim readers! My friend told me that he had changed $1000 worth of money so that he can give to his younger relatives and his elders. How can he make the money back since he is unmarried and do not have any children?

Muslims are prohibited from engaging in any form of investment related to interest-bearing financial services such as banks and insurers, haram (forbidden) things such as alcohol, tobacco, gambling, pornography, production of military weapons, trading of gold and silver as cash on a deferred basis, and others such as advertising and media. So, what is there that is left to invest in?

Plenty, actually. So long as the securities and investment tools do not go against the Islamic philosophy and laws, they are allowed. These include stocks in the energy, technology, oil and gas as well as infrastructure sectors. These sectors have done extremely well in recent years. Perhaps this is one reason why you hear of oil sheiks more often than not, because this is one sector they can totally invest in.

Despite the recent volatility due to subprime losses in the US markets, Shari’ah-based investments have been protected since they do not engage in the financial markets.

One such fund that you can get locally is the DBS Mendaki Global Fund. These are the companies that it invests in. Apple is a great stock they are holding on to. In addition, the annual management fee is extremely low at 0.5%, which they attributed to corporate social responsibility. It has gained 33.5% in a year, which is extremely decent.

Companies they invested in
APPLE COMPUTER INC
ISHARES-MSCI JAPAN INDEX FUND
TRANSOCEAN SEDCO FOREX INC
SUEZ
OIL SERVICE HOLDRS TRUST
MIDAS HOLDINGS LTD
NVIDIA CORP
PHILIPS ELECTRONICS NV
NEW ORIENTAL EDUCATIO-SP ADR
SINGAPORE PETROLEUM CO

Research: Fundsupermart: Investing, A La Shari’ah by Wallace Goh.

Sarah Tan – SingaporeProfit