Islamic finance is a system of financial activities that are consistent with Sharia (Islamic law).
Major principles of Islamic Finance that differ from conventional finance are:
- Ban on interest (Riba).
- Ban on uncertainty (Gharar): transactions involving uncertainty, risk.
- Ban of speculation, gambling (Maisir).
- Risk-sharing and profit-sharing: both parties in a financial transaction must share the associated risks and profits.
- Ethical Investments that enhance society: Investment in industries that are prohibited by the Quran such as alcohol, pornography, gambling, and pork-based products is discouraged.
- Asset-backing: each financial transaction must be tied to a “tangible, identifiable underlying asset”.
The HSBC Islamic Global Equity Index Fund
- The fund tracks the DJ Islamic Market Global Titans 100 Index, which is Sharia compliant.
- The fund follows an investment process that has been approved by an independent Sharia committee.
- The Sharia committee monitors the fund throughout the year and issues an annual Sharia certificate on the fund’s compliance with Sharia principles. This certificate is included in the annual financial report of the fund as a confirmation of the Sharia compliance for that year.
- HSBC harnesses the knowledge and expertise of a global network of over 200 equity specialists in over 20 countries and territories.
- Their fundamental research adds value within a disciplined framework.