WATCH: Responsible investing - what is Shariah compliance?

2017-07-21 10:30
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Cape Town - It is a myth that Shariah compliant products perform poorly in comparison to conventional funds, according to head of research at Kagiso Asset Management Abdul Azeez Davids.

“Investing in a Shariah compliant fund is not going to generate lower or inferior returns,” he said in an interview with Fin24.

The term Shariah refers to a set of laws and regulations that govern a Muslim's life and Shariah compliant investing is an important branch of that law. This does not mean Shariah compliant funds are only for Muslims.

In explaining the concept of Shariah compliant products, Davids said that it was about prohibiting the giving or receiving of interest, in line with Islamic religious law.

The investor makes money through capital profit – buying low and selling high in companies deemed to be Shariah compliant, as well as receiving dividends from these company shares.

Davids urged young people taking care of their parents to start saving early. "You need to allocate some of your budget to savings."

He added that even entrepreneurs need to be educated to save.

"Even if you put away R500/ month – over 20 to 30 years, that adds up. Sadly, we have seen many people who do not save, end up as beggars.”


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