First Islamic investment fund approved

  • Published : May 5, 2010 - 17:01
  • Updated : May 5, 2010 - 17:01
The Financial Supervisory Service approved Korea’s first Islamic investment fund that operates in strict conformity with the precepts of Islamic Sharia law.

The Yurie Shariah Compliance Korea Index developed by Yuri Asset Management invests in 78 local blue chips acceptable under Sharia. Shinhan Financial Group, KB Financial Group and Samsung Life Insurance are excluded from the list as it is unlawful for an Islamic fund to purchase, hold or sell shares of brokerages. KT&G and Kangwon Land, Inc. are also excluded to leave out the drug and gambling industry.

Restrictions on processing of pork and slaughtering of animals excluded the producers of livestock goods from the fund.

The conservative management of Islamic funds do not usually profit as much as other mutual funds but is known as a safe bet among investors. Sharia bans taking fees on transactions, and investors are advised to enter into the fund with a clear understanding that under the Islamic law, the return on their subscription is tied up with the actual profit earned or loss suffered by the fund.