We follow a 3 step process to make sure our client’s investments are halal.
The first step is determining if an investment is interest-based or profit-based. Some common interest-based products are fixed-income, GICs, Bonds, and Debentures. If you hear these words it means you are lending someone money and getting interest in return. Run!
On the other hand, Profit-based investments are fine to invest in. Dividends, Stocks and Equity are all terms that can be associated with profit. If you hear these words, you can move on to the next step.
As Muslims we cannot earn profit off something haram. That is why we will not buy investments in any of the following secotrs:
We can however profit from positive sectors. A few examples would be:
Once we know we are dealing in a halal sector we can move on to step 3.
Finally, there are certain financial ratios that must be adhered to in order to have a halal investment. These ratios avoid excessive risk, debt or careless business practices. This debt to equity ratios and excessive leverage must be below 30% of the companies values.
Once we do this screening we have a halal investment!
By leveraging the firm’s unique structuring platform, CIW has developed a range of Sharia-compliant products to address the needs of this growing market. Our Sharia-compliant product offering today spans debt and equity capital markets, investor products, cash management and Murabaha liquidity products, risk management and asset management funds. CIW is dedicated to developing products and services that observe and respect Sharia-compliant ethical principles.
Halal Investing is Socially Responsible in its avoidance of particular products and industries, but its adherence to Islamic principles extends to avoiding interest-bearing or highly-leveraged vehicles. The complexities of many investment vehicles, combined with the vast scope of many large companies, make it difficult to ascertain whether an investment is compliant without the help of a qualified advisor.
Our main goal is to provide Islamic banking solutions to clients with increasingly sophisticated financing needs.