Pension fund members should demand funds that cater for religious and ethical beliefs
27 September 2007 | Investments | General | Oasis Asset Management
With the move towards defined contribution pension funds and member investment choice, members have increasingly been given the freedom to exercise greater decision making control over their retirement fund assets.According to Adam Ebrahim, CEO of Oasis Group Holdings (Oasis), this freedom should also be extended to cater for members religious and ethical beliefs. "Why should someone who has chosen to live their life according to certain beliefs, be forced to invest their savings in a way that is not consistent with their beliefs?"
"For example, there are still many thousands of Muslims in this country who have not been given the option to invest their retirement fund assets in Shari'ah compliant portfolios," says Ebrahim. "These people should be demanding the right to be able to do so."
Shari'ah law prohibits transactions that involve interest, gambling, speculation, unethical investment or pornography.
"The Shari'ah compliant market was historically constrained by product development. However, this has been a key focus for Oasis with the result that for the last seven years, the group has been offering Regulation 28 products that are Shari'ah compliant, including retirement annuities, preservation funds and umbrella pension funds. Regulation 28 sets out the maximum percentages that a retirement fund may hold in equity and property etc, as well as the maximum percentages that may be held in respect of individual investments.
According to Ebrahim, Oasis' Shari'ah compliant investments have produced exceptional returns over the last few years.
For example, the Oasis Crescent Equity Fund has generated an annualized return of 35% since its inception in August 2001 to 31 July 2007. This is in comparison to the 21.8% annualized growth in the FTSE/JSE All Share Index and 19% annualized growth in the average general equity fund over the same time period.
Positive effect on society
Ebrahim says the returns of the Oasis Shari'ah complaint funds have also had a positive impact on society as a whole through the channeling of non-permissible income, via the Crescent Fund Trust - a public benefit organization focused on educational, healthcare, disaster relief and other community initiatives. "Our investors have enjoyed superior returns at lower at than market risk and have done so whilst fulfilling their moral need for an ethical investment as well as having benefited poor communities."
He says numerous professional services firms are already offering these Sharia'ah compliant options to employees. "Particularly in accounting, auditing, and legal firms, where members have closer contact with their retirement fund Trustees, we are starting to see Shariah compliant retirement fund options being offered to employees.
"Similarly, member choice is also becoming more prevalent in other areas where members have high financial and legal literacy such as higher education institutions and financial services firms."
