40,000
Securities screened
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Why consider Franklin Templeton for Shariah-compliant investing?
For more than 75 years, Franklin Templeton has been developing client-focused solutions to meet the needs of investors worldwide. We combine this experience with strict adherence to the financial principles of Islamic law to offer customised Shariah-compliant portfolios across a range of asset classes.
Today, we are one of the very few global Shariah asset managers, with investment professionals located in global Sukuk issuance hubs – Kuala Lumpur, Dubai and Riyadh, supported by the analysis and insight of a global network of 200+ investment, trading and risk professionals.
35+
Years of Islamic investing
US$4.8bn*
Shariah assets
* As at 30/09/25.
Our approach
Independent endorsement from an esteemed board of scholars
Our portfolios are independently reviewed and endorsed by the Amanie International Shariah Supervisory Board. They are recognised experts in this field and highly regarded for their extensive Shariah and technical understanding. The Amanie scholars provide initial approval on investment objectives and strategy, as well as ongoing supervisory and monitoring services to maintain adherence to internationally accepted Shariah principles and standards.
World-class screening technology and process
To help ensure compliance with Shariah guidelines, Franklin Templeton leverages best-in-class technology using criteria established by our Shariah screening provider. Approximately 40,000 global securities are screened by IdealRatings using a rigorous process that drills down to a granular level on the business activities of every company being researched.
In addition, selected financial ratios are assessed using prescribed algorithms with the aim of ensuring Shariah compliance.
Comprehensive, integrated risk management
Each portfolio team employs a disciplined investment process designed to measure and manage risk. In addition to investment team-specific risk management practices, they leverage analysis and insight from our worldwide network of locally based risk management specialists.
Trading/Investment infrastructure
We have well-functioning and robust infrastructure in place for Shariah investing, with the right technology for effective screening and enabling processes. Our global footprint with 24/7 trading across global markets facilitates Shariah-compliant risk management across funds and mandates (Shariah-compliant profit-rate swaps, FX forwards, and options). This allows for multi-asset funds, private markets and outcome-oriented strategies.
Investment benefits of a Shariah strategy
A Shariah-compliant investment may be seen as a basic building block.
It can add stability to an investment portfolio and can potentially provide growth whilst reducing volatility (the ups and downs of an investment’s price/value).
It provides the opportunity to contribute to the strengthening of global Islamic finance.
Shariah-compliant investments provide funding for projects in Islamic societies across the world which aim to enhance the living standards and economic growth within these societies.
It gives access to Islamic assets and MENASA1 economies.
A pooled investment vehicle, such as a mutual fund, provides easy access to a market which can be difficult for individual investors to enter.
You can participate in a rapidly growing financial sector.
Islamic finance grew by a compound annual growth rate of 8.8% between 2011 and 2021. By the end of 2022, worldwide investments stood at US$3 trillion.2
It’s ethical.
Shariah-compliant investments are based on specific religious principles and guidelines. These include the exclusion of gambling, alcohol, tobacco, and the prevention of usury (charging interest). So, it gives built-in access to an ethical investing style.
Our shariah investment strategies
For clients who seek adherence to the investment principles of Islamic Law, Franklin Templeton brings to bear its extensive global investing expertise in combination with the knowledge and advice of Shariah scholars to deliver customised Shariah-compliant portfolios across a range of asset classes including global and regional equities and Sukuk.
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At Franklin Templeton, we combine extensive global investment expertise with the knowledge and advice of Shariah scholars. This helps us deliver customised Shariah-compliant portfolios focused on clients’ investment aspirations.
To discuss how we may help you meet your Shariah-compliant investment goals, please contact your local Franklin Templeton representative.
Recognised expertise:
How does Shariah-compliant investing work?
First and foremost, it is governed by the requirements of Shariah law and the principles of the Islamic religion.
Islamic teachings have do’s and don’ts: where, in Arabic, Halal means “permitted” and Haram means “prohibited”.
A Shariah-compliant investment includes Halal industries and excludes Haram industries, such as those selling prohibited goods, for example tobacco or alcohol.
There are specific investment considerations when screening for exclusions in a Shariah-compliant investment: Gharar, Maisir and Riba.
Gharar
Participation with excessive risk or uncertainty
Maisir
Anything involving gambling or speculation
Riba
Receiving interest on investments
Because of Riba, Shariah-compliant investors can’t hold interest-paying bonds. Instead, the asset manager buys a Sukuk. This is an Islamic financial certificate that complies with Shariah laws.
The issuer of a Sukuk essentially sells a certificate and then uses the proceeds to purchase an asset that the investor has partial ownership of. Benefits for the investor are through profit sharing, and not ‘interest’. The issuer must also make a contractual promise to buy back the certificate at face value at a future date.
A Shariah-compliant mutual fund will also have a Shariah Board. This will comprise Islamic scholars who research and decide which companies meet the rules for investment.
A final point to note pertains to quantitative exclusions related to debt. For example, companies with more than 1/3 debt/ equity will be excluded. This reduces portfolio risk.
Footnotes
- Middle East, North Africa and South Asia (MENASA).
- Source: Islamic Financial Services Industry Stability Report 2022.
Important Legal Information
This information provided is intended to be of general interest only and does not constitute or form part of any offer to invest nor is it an invitation to invest. It was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Any research and analysis contained in this presentation has been procured by Franklin Templeton Investments for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Any views expressed are the views of the fund manager and do not constitute investment advice. The underlying assumptions and these views are subject to change. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund’s holding at any one time. Franklin Templeton Investments accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of this commentary or any information, opinion or estimate herein. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance.