Shar’iah-compliant funds are investment funds governed by the requirements of Shari’ah law and the principles of Islam and are considered to be a type of socially responsible investment. Shari’ah investing principles have historically been interpreted by scholars to determine what the minimum standards are that an investment must satisfy to meet the requirements of Islamic Law.The short answer is yes.
We leverage the Old Mutual proprietary ESG signal in our investment approach. For a company to be eligible for our selection it must be Shari’ah-compliant and analysed through our proprietary ESG Risk Screening Model. We also developed a one-year ESG score to capture changes in the company’s ESG profile, investor sentiment and price behaviour.To best understand this investment approach at work, a company example works well as an illustration.
Cisco Systems Inc’s ESG rating trend has upgraded from A to AA rated, and it is among the leaders relative to its peers in seeking opportunities in clean technology, with its rating in clean tech being 57% greater than that of its industry peers. Cisco has a strategic focus on clean technology and aims to increase investment in clean tech while actively participating in increasing its revenue lines in the green economy.
We anticipate continued local growth for both Shari’ah and ESG funds and since our Shari’ah Funds blend ESG into our investment process, this allows us to offer a more all-encompassing proposition to support this growth.