Islamic Assets tend to be more Risk Averse

Sharia compliant funds tend to perform better in times of market turbulence because they do not hold banks or insurers.

In an interview with Bloomberg, Gerald Ambrose, Aberdeen Islamic Asset Management said Islamic Assets tend to outperform in uncertain times. Highlighting the low interest rate environment of banks, he added banks are hardly making any money coupled with heavy regulatory burdens.

Based on Islamic finance industry filters, conventional banks are not considered Sharia compliant and not compatible for investment either directly or more commonly through Islamic funds.

GlaxoSmithKline vs. Barclays

After the recent “risk-on” market volatility following the United Kingdom’s decision to leave the European Union, a comparison between a bellwether of many of an Islamic fund, GlaxoSmithKline against non Sharia compatible business Barclays bank illustrates GlaxoSmithKline gaining 6.85% whilst Barclays fell 26.01%.