What is meant by Islamic investment funds?
With the diversity of participatory investment funds with different investment orientations, some of which are compatible with Islamic Sharia or not, Islamic investment funds were an encouraging investment opportunity for savers who see the inevitability of specializing in their transactions and methods of trading their assets and dealings according to methods compatible with halal Islamic Sharia and avoiding investment. In assets forbidden by law.
Islamic investment funds can be described as a permissible investment field in its Sharia form, suitable for savers and investors who are embarrassed by usurious interest and investment trading mechanisms that do not conform to Sharia determinants.
Characteristics of investment funds compatible with Islamic Sharia
Participatory and interest-free financing have today become one of the investment options that are strongly present in capital market operations around the world, thanks to the healthy investment opportunities it provides, which is naturally a preferred option for many investors.
Islamic investment funds are considered investment tools that allow those wishing to invest their savings through non-usurious investment methods to benefit from the tools available in the capital market and other investment channels. All non-usurious financial instruments made available by the advisory bodies in these funds are among the capital market tools appropriate to the system. Islamic participatory financing, such as company shares, profit-sharing bonds, real estate investment funds, and participation shares in venture capital investment funds.
In this system, the company that manages the fund invests these assets as an agent for the investors, and in return receives a fee and a percentage of the profit, and the investor is a partner with his capital in the event of profit or loss.
So, the most important characteristics of investing in Sharia-compliant funds are:
- Investing in permissible assets and avoiding investing in forbidden assets.
- Compliance with the provisions of Islamic Sharia in buying, selling, and quotas.
- Transparency in dealing and the presence of an expert in the Sharia evaluation of the funds’ work.
In addition to the components of other funds, which share the rest of the characteristics with others.
The most famous types of Islamic investment funds
Speaking of the types of investment funds; Here we discuss some of the most well-known funds in the field of Islamic participatory investment, with a brief statement about the Sharia-compliant trading conditions within these funds.
1. Stock Funds
They are investment funds specialized in investing in shares of companies listed on the stock markets (stock exchange), and they build their profit growth system based on the growth in the prices of the purchased shares, where shares are purchased at a time when their price decreases and then sold at a time when the share price increases. According to the investment vision and study goals.
Before investing in company shares, it is necessary to ensure that the company whose shares you want to buy is: compatible with Islamic law in its areas of business, types of products, and financial transactions.
2. Real Estate Funds
They are investment funds specialized in the field of the real estate sector of various types, with real estate as their subject matter, as these funds own, manage, and invest in income-generating real estate.
In most cases, real estate funds are relatively cleaner than other funds in terms of their Sharia dealings, provided that these real estate investments do not include properties that violate Sharia law, such as illicit drinking bars, and also on the condition that Sharia standards are adhered to in the financial transactions carried out by the fund.
3. Instrument Funds
It is possible to provide instruments issued by governments and companies; Financial instruments with fixed income and investment forms compatible with the provisions of Islamic Sharia. However, it is required that the entity issuing the instruments be a reliable entity in its permissible dealings and that the instruments do not include conditions of usury, deception, or ignorance.
4. Commodity Funds
These are funds whose investments relate to types of commodities tradable in stock markets. The role of commodity funds is to purchase certain commodities and then sell them later at a better price. Given the specificity of the work of commodity funds, these funds have focused mainly on international commodity markets instead of financing local commodities and intended commodities. For trading by these funds are commodities that have a strong presence in stock markets, such as aluminum, copper, petroleum, wheat, and other commodities.
These investments can acquire the status of legitimate investment, provided that the traded goods are not prohibited by Sharia, that they are among the goods that are permissible to buy for cash and sell on credit, and that the trading mechanisms are free of usury or any other impermissible dealing.
5. Funds denominated in precious metals
These funds specialize in investing in precious metals, such as gold and silver, and other precious metals used in industry, such as platinum, palladium, iridium, and ruthenium, which are usually traded on stock markets. In these metals, there is a detail related to the type of metal. Gold and silver are among the metals that require exchange, and therefore the funds are supposed to own their assets tangibly, and not to sell these two metals for the same price. For the prohibition related to this matter.
The most important differences between Islamic and traditional investment funds
It is no secret from those familiar with the system of financial transactions in Islamic law that the rulings are flexible on the one hand, and that they control the mechanisms of buying, selling, and trade through contracts that guarantee every rightful person his right, and preserve the rightful owners’ rights, without allowing deception, deception and ignorance to enter into the context of all transactions.
Islamic banks have been the first and most pioneering in consolidating the practice of these provisions and proving their effectiveness. For example: The Sharia Mudaraba contract (on which Islamic banks operate) does not make the bank a borrower from the owners of capital, and this does not create a debt relationship between them. Rather, the bank is In the position of capital manager, the bank's income is generated primarily through its ability to manage these funds and direct them towards growth while managing potential risks.
Also, the difference between Islamic investment funds and conventional funds may be fundamental in their content, and therefore these funds must be subject to supervision by Sharia committees that study the fund’s transactions, assets, and all financial procedures.
Perhaps the most important principles that represent the difference between Islamic investment funds and traditional funds are:
- Investing in permissible assets, and not investing in assets prohibited by Islamic law, whatever they may be.
- Complete submission to the teachings of Sharia law and avoiding the various transactions that Sharia has forbidden, most notably usurious interest and transactions mixed with deception, deception, and ignorance. The investor in the fund is also a partner in the fund for profit and loss, to the extent of his capital.
Oragon Company for establishing and managing Islamic investment funds
Given our belief in the role of participatory investment and its ability to raise capital and generate profits, our interest in an investment that is compatible with the terms and conditions of Islamic Sharia, and our possession of mature investment tools represented by our brilliant work team with its achievements and rich history. Today, the name “Oragon Company” shines in the joint investment sector to stand out as one of the most important Investment fund management companies in Turkey.
Thanks to its experienced team with a strong reputation; With our presence in several investment fields in Turkey and abroad, Oragon today offers a participatory investment model that is rich in experience and strong in its field of services, starting with free consultations specialized in the field of Islamic investment funds, and not ending with the management of real estate funds and other funds and diverse investment portfolios following Sharia.
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