Investing In Islamic Funds: A Practitioner's Perspective

CHAPTER 6

Mitigating the Myths

The Benefits of Islamic Funds for the Broader Investor Base

And We have not sent thee save as a bringer of good tidings and a warner unto all mankind.

(Saba: 28)10

INTRODUCTION

When I was a speaker at an Islamic finance conference in Vienna, Austria, in February 2012, a middle-aged European participant provoked me with the following view: “I am not comfortable with all the exclusionary screening in Islamic investing and I believe that the smaller investible universe will result in performance drag on my investment portfolio.”

My response to him was to pose a choice. “You have two portfolio that exhibits higher stability, although it is, both granting the same performance return. One is constructed from a smaller investment universe that exhibits higher stability, and the other is constructed from a larger universe that exhibits less stability. Which one would you choose?”

He paused and answered, “I would choose the portfolio that exhibits higher stability, although it is constructed from the smaller investment universe.”

This is an example of the types of misconceptions about Islamic investing that need to be debunked in order for Islamic investment funds to be accepted by everyone.

Now that investors are aware of the wide choice of Shariah investment products available in the market, they should learn to appreciate the benefits that come along with Shariah investing. Making decision to invest in Shariah investment products can be challenging if ...