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Old Mutual launches shariah equity portfolio for high net worth investors

19 June 2019 Moosa Hassim, Manager of the PCS Shariah Equity Portfolio at Old Mutual

Old Mutual Wealth’s Private Client Securities (PCS) has launched a Shariah equity share portfolio for high net worth individuals, making it one of a few providers in South Africa to offer Shariah-approved private client share portfolios. Moosa Hassim, Manager of the PCS Shariah Equity Portfolio, explains that this means that the portfolio does not invest in companies whose core business involves dealing in alcohol, tobacco, pork, conventional financial services, defence or weapons, gambling, gold and silver hedging, music, cinema and adult entertainment. “The Old Mutual Wealth PCS Shariah Equity Portfolio specifically adheres to the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) as interpreted by the Shariah Supervisory Board. At its heart, Islamic finance is about ensuring fairness and the absence of harm, meaning it has similar foundations to the socially responsible investment philosophy espoused by Old Mutual’s commitment to using the moral and ethical guidelines of environmental, social and governance (ESG) principles to mitigate investment risks,” says Hassim.


The portfolio is open to individuals willing to invest a minimum of R1m in an equity portfolio focussed primarily on high quality South African shares, with a view to outperform the FTSE/JSE Shariah All Share Index over a three-year period. “Growth in Islamic assets under management has been excellent when compared to conventional offerings and this presents a big opportunity for a bespoke private client offering,” he says. “Personalised professional service and a sense of informed control are extremely important for this type of investor.” Hassim explains that this is not a unit trust offering but a bespoke equity portfolio for high net worth clients that is registered in their own names. “This makes it particularly relevant to individuals who have a predisposition towards shares or direct market investments and want their portfolio customised around the specific requirements and ethical preferences.”

“Global trends in the wealth management industry indicate that high net worth individuals are increasingly moving away from pooled investments such as unit trusts and into direct share portfolios. Research indicates that in South Africa there may be as much as R1 trillion invested directly in the stock markets by private individuals.” “Given the increasing levels of financial literacy, the abundant sources of quality information and the number of direct stock market investing routes that are available, one would expect this number to increase even further,” said Hassim. “More and more affluent clients are looking at having ownership in listed companies registered in their own names as part of their overall investment strategy. They want to be more involved in the creation and preservation of their wealth and, to varying degrees depending on the individual, they want a means of participating in the construction and management of their investment portfolios.”

The Old Mutual Wealth PCS Shariah Equity Portfolio has a traditional share portfolio structure and generally contains between 18 and 22 holdings, allowing for sufficient diversification. Hassim states that holdings are chosen via a rigorous investment process ensuring that only high-quality companies that comply with the principles of Shariah are included. “This includes a financial screening process that excludes companies that do not comply with the minimum acceptable levels of debt, receivables and interest income,” he concludes.

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