Principles of Islamic banking and finance/PIBF203/Portfolio management/Video signpost
In this video, Dr. Shamim Siddiqui from Hamdan Bin Mohamed Smart University, provides an overview of Portfolio Management from an Islamic perspective
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Video transcript
Fund management involves a group of investors channeling their surplus money to a legal entity known as a ‘fund’. A fund pools the collected funds and invests it in a diversified portfolio of securities and other assets to achieve specific financial goals. Investors, usually known as shareholders or unit holders, can be individuals or institutions. The legal entity that professionally manages the funds and undertakes the investment on behalf of the investors is known as a fund manager or fund management company. The fund manager handles the clients’ investments, establishing a portfolio of assets constituting securities such as stocks, bonds, money market instruments, a combination of these or even other funds. Islamic investment funds are similar to conventional funds in terms of the common objectives that they share, such as pooled investment, capital preservation and returns optimization. The activities of the two sets of funds are also similar. However, Islamic fund management is about the professional management of investors’ money in Shariah-compliant securities and assets, in line with Shariah principles to achieve set financial goals. Elements such as Shariah screening of investments, the role of Shariah boards, Shariah governance mechanisms involving Shariah reviews and audits, purification of impure income and alms-giving (zakah) calculation are important in the adherence of Islamic funds’ activities.
