Scotland leads way in offering Shariah compliant funds

Scotland leads way in offering Shariah compliant funds

BARCLAYS Wealth has launched a number of Shariah-compliant products to compliment the range it already offers.

he drive for the company to offer products and services to help Muslims in the UK manage their money is being led by Barclays Wealth in Scotland.It said the global demand for Shariah investment products is on the increase and growth projections of the Islamic investment management industry are now estimated at between 15 per cent to 20 per cent per annum. Three index tracking exchange traded funds (ETFs) have been launched this month. These have lower charges than actively managed funds – many of which have under-performed in recent times despite their cost.The three new ETFs provide instant access to a range of investments compliant with Shariah law. They are intended to let people maximise diversification and take advantage of the growth opportunities offered by world equities, emerging markets and the USA, all in a single trade. The ETFs are certified by Islamic scholars, are transparent investments and have been stringently screened to ensure they are Shariah-compliant. Saftar Sarwar, manager in private banking at Barclays Wealth in Edinburgh, said:

“These ETFs have a unique structure as they let the investor decide where to distribute the non-Shariah part of any dividend. With other products the decision is made for them.

Theseare excellent ways to take exposure to global, emerging markets and US equities in a Shariah-compliant manner.”

Sarwar said that further developments are planned for 2008, for example the launch of hedge funds and mortgages.Muslims consider interest on sums borrowed or loaned as haram – money for nothing, without entailing any risk – which has to be avoided. Returns have to be structured under different rules, perhaps linked to commodities or rental or lease payments, rather than interest.There is also an ethical element to consider. Muslims must not invest in companies they believe are harmful to society or make profits from immoral means. Companies involved in alcohol, tobacco, defence and pornography are strictly prohibited.

There is a large Asian wealth market in Scotland worth at least £300 million.And estimates put the Shariah-compliant market at about £ 150m.