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Investing using Raiz – is it Shariah-compliant?

31 May 2020 (UPDATED 09 Mar 2022)

by Aidi Izham, CFP®, MIFP

  • When you invest using Raiz, you invest in a portfolio made of unit trust funds.

  • This fund will invest in many assets for example shares, bonds, cash, gold, etc.

    • That means, your portfolio of investments consists of many assets.

  • Does this fund invest in shariah-compliant assets that make it a shariah-compliant fund?

    • The answer is yes. Example:

      • abrdn Islamic World Equity fund

      • UOB Global Balance - Shariah fund

      • UOB High Quality Sukuk fund

      • AHAM Shariah Gold fund

      • Aiiman Growth fund

      • Nomura Global Shariah Semiconductor fund

      • Nomura i-Cash fund

  • However, for funds managed by Amanah Saham Nasional Berhad, ASNB (PNB unit trust company) below:

    • ASN Equity 3 fund

    • ASN Imbang 2 fund

    • ASN Sara 1 fund

  • The ASNB funds above have invited two views:

    • First: according to the Securities Commission Malaysia (SC), the regulator of the Malaysian capital market — the funds are NOT shariah-compliant.

      • Why? It is mainly because of PNB’s strategic investment in banking stocks, which is considered a Shariah non-compliant financial services stock. For SC to say a fund is compliant, they look at the business activity benchmarks and financial ratio benchmarks, while at the same time accounting for qualitative aspects that involve public perception or image of the company’s activities.

    • Second: according to the Islamic local councils in Malaysia ie. Jawatankuasa Fatwa Negeri and Jawatankuasa Fatwa Majlis Kebangsaan, the funds are “harus”, because:

      • PNB’s mandate is to enrich the lives of the Bumiputera, which majority are Muslims. PNB has some 14 million unitholders, of which about 80% are Bumi.

      • PNB does not invest in “haram” shares such as alcohol, gambling, or tobacco.

      • There are a limited number of Shariah-compliant equities on Bursa Malaysia as compared to how much money PNB has that needs to be invested.

      • If PNB pulls out its investments from the banking stocks – especially Maybank (KLSE: Maybank) where it owns majority of the shares – that would have a major negative economic impact on Bumi Muslims.

      • If PNB did not have majority shares in Maybank, for instance, it would lessen the acceleration of Islamic finance in the country. Maybank Islamic is the largest Islamic banking group in Malaysia and ASEAN by assets.

      • Therefore, for the above obvious reasons, after considering and prioritising wider public interest (maslahah), keeping the investment in Maybank is regarded as essential (dharuriyyah) – hence the ruling “harus”.

  • In conclusion:

    • From the SC – the funds are not Shariah-compliant.

    • From the Islamic local councils – the funds are “harus”.

    • There is no force if one wishes to invest or at all. That’s why the principles of needs (hajiyyah) provide a certain flexibility and freedom (although not absolute) for the individual to choose.


Source: Bursa Malaysia, FAST BNM, PNB Annual Report 2019, asnb.com.my, pnb.com.my

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The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information on this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

The past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

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