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Johannesburg - Stanlib is to launch a Shari'ah-compliant unit trust at the beginning of next month (July) - the first time it has created an investment product specifically for the Muslim community.
The product - the Stanlib Shari'ah Equity Fund - follows the rigorous parameters set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
Stanlib is the country's largest unit trust company and markets the investment industry's most comprehensive range of funds.
Ashraf Mohamed, manager of the new fund, says: "Stanlib prides itself on offering products that meet the needs of every type of retail and institutional investor. The creation of a Shari'ah-compliant fund is a logical extension of this range.
"We believe there is strong local demand and that the fund will establish itself in its special niche.
There are 350 000 to 400 000 Muslim households in South Africa, creating a potential savings and investment market worth R1.2bn a year.
Shari'ah (sacred law) governs the behaviour of Muslims in financial matters as well as other aspects of daily life. To enjoy the sanction of Shari'ah law, a financial product has to observe strict rules.
In the past, varying interpretations complicated the task of financial product development. In recent years, the AAOIFI has provided greater clarity and today there are more than 120 Islamic funds worldwide, including three in South Africa.
Stanlib's new general equity fund focuses primarily on capital growth and preservation. It respects all AAOIFI strictures, including the prohibition on interest-driven earnings and the ban on investment in companies engaged in activities that may be offensive to Muslims.
The fund may not buy shares in, among others:
- Alcohol manufacturers and distributors
- Financial institutions
- Casinos and gambling outlets
- Companies connected to pornography
- Tobacco firms
- Weapons manufacturers
- Purveyors of pork and non-Halaal meat
Positions may not be taken in heavily geared companies and any business whose market value is significantly enhanced by interest-bearing instruments.
Any earnings attributable to a non-permissible source have to be stripped out of the portfolio.