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Shariah Law Guide

 

Shariah Compliant Investment Vehicles

In light of the restrictions posed by Shariah law, specific investment vehicles are required in order for Muslims to invest.

Introduction

As of 2007 the Muslim population in the world stood at about 1.6bn, countries with the highest Muslim populations are Indonesia, Pakistan, Bangladesh, India and Turkey. However, countries with the highest Muslim concentrations are mostly located in the GCC where the percentage of Muslims population ranges from 90-100%. This high concentration of Muslims renders the GCC the most sensible market entry location for Shariah compliant investment vehicles.
With so much money being generated from the sales of crude oil, coupled to rapid increase in oil prices over the last year, has resulted in the accumulation of a vast amount of unmanaged wealth in the Middle East. The Western world has captured a relatively low share of this vast reserve of wealth, due to the relatively low number of Shariah compliant investment vehicles in the west compared to South East Asia or the Middle East where Islamic finance is much more developed.
Investors that are interested in investing in Shariah compliant funds should be informed about the general types of funds, how a Shariah compliant fund operates and the additional implications that Shariah brings to risk and returns on investments.
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