ANALYSING SHARI'AH COMPLIANT PORTFOLIO

Analyzing Shari'ah Compliant Portfolio

Abstract

This paper has discussed the shar'iah complaint portfolio management. Moreover the paper has evaluated the Islamic portfolios and it also has highlighted the difference between the conventional portfolio management and the Islamic mode or Shariah Compliant portfolio management. This paper has also analysed the present approach of Islamic portfolio investment in an organization in addition to that some recommendations and suggestions are also purposed to that organization. Moreover this paper also evaluates the economic benefits of investing in an Islamic portfolio. The need of research is also highlighted and the skills which are required to manage a Shari'ah Compliant portfolio is also discussed in this paper.

Q.1

Before explaining the diversification of the portfolio one should know about the portfolio management and the diversification. Moreover the fund manger of shari'ah compliant portfolio must be known to the guidelines and principles of shari'ah.

Portfolio management

The management of financial assets and assets is designed to private, corporate and institutional clients. Once defined customer profile, and depending on market conditions, the Investment House can always allocate financial wealth by various products:

Shares, Obligations of governments, Bonds issued by companies with good credit ratings, Treasury Funds, Deposits, Investment Fund Shares, Bonds and Real Estate, Structured Products and Fixed Rate Guaranteed Capital (Fathi & Ahmadinia, 2012, 1-18).

This service should be construed as Financial Advice Private, whose aim is to provide our customers a wide range of financial products that allow the creation of a portfolio that fits the risk profile, enabling the best ratio of risk and return the diversification of its assets and to give peace and security to the investor. In this financial advice we believe that our independence in relation to any financial group guarantees our customers that our suggestions will lead investment always consider the safety of the investment and maximizing their returns (Siddiqui, 2001, 15-20).

The Islamic finance industry is a young industry growing at double digits, transformed into a respectable and robust source of alternative investment class mainstay. Expertise is required in the field of asset management investment, which is critical for asset classes that are available in the Islamic financial system. Fund managers and portfolio managers for investment in this area to ensure that all financial activities are conducted in accordance with the principles of Sharia and standards, guidelines and best practices established by the governing bodies.

The Islamic financial services can be defined as financial services consistent with the principles Islamic law (Shariah). The Shariah prohibits (i) the collection and payment of interest, (ii) the trading risk Financial (seen as a form of gambling) (iii) speculative trading or buying debt without this has underlies the transfer of a real asset, and (iv) financing activities considered prohibited, such as the sale of pork or alcohol. Islamic finance can thus be described as being based on four theoretical principles basic: a) Sharing risk: in the Islamic finance the financial transactions must reveal a symmetrical distribution of the risk and return that participants of the transaction might ...