Shari'ah funds

What is Shari'ah law?

Shari'ah law is a set of Islamic principles adhered to by Muslims, and is derived from the central religious text of Islam, the holy Qùran, and other Islamic scriptures.

Shari'ah law governs nearly all aspects of Muslim life, including placing certain restrictions on the types of finance and investments available within Muslim countries. Investments that are considered unfair or unethical under Shari'ah law ie investments where the burden of risk is carried by only one party, are therefore prohibited. The guiding principles of Shari'ah have precluded Muslims from investing in many forms of conventional investment vehicles, predominantly those seen in the West. In consequence, the Shari'ah compliant investment market has seen a major surge in popularity in recent years to cater for the growing interest in this method of investment. Further information can be found in Practice Notes: Sources of Shari'ah and Key principles of Islamic finance. Also, Practice Note: Glossary of Islamic terms and jargon pulls together key definitions and acronyms