Updates on the Public Asia Ittikal Fund (PAIF) Syariah Compliancy Issue

About a couple of weeks back, I wrote an entry about Public Asia Ittikal Fund’s (PAIF) syariah compliancy status. Read about it here.

I did get a response from a unit trust agent a few days after that.

Here’s the excerpt:

“Our investments are looked at by the Securities Commission. Any investment that is not compliant to syariah based, can [be] penalised by the Securities Commission. The Trustee for PAIF, if I am not mistaken, is CIMB.

Public Mutual cannot make an error like that as it would jeopardise the good name of the company and the trust that many Muslim investors have in Public Mutual.”

My response:

Unfortunately, that doesn’t really answer my question.

I would gladly appreciate if my concerns are addressed based on the issue laid out in my original article, which was the total debt versus market capitalisation issue. If I am wrong, then I need Public Mutual to explain to me based on that argument, rather than claiming “Oh, somebody is watching over us, so, whatever we’re doing is fine.”

Also, I highly doubt the Securities Commission (SC) monitors companies from around the world. I don’t think they have the time to monitor companies in China, Australia, Japan, Taiwan, and the rest of the world for that matter, and still maintain order in Malaysia’s financial market.

I did have a look at SC’s syariah guideline, and there are these benchmarks of allowed non-Islamic activities in a company. The maximum, I believe, is 25%. As I have stated, the company mentioned in my previous article utilises more than 50% of debt (conventional debts that has interest components in it which ultimately amounts to Riba’).

Furthermore, in the fund prospectus itself, it was stated that there are risks of investments under their portfolio not being syariah-compliant. If it was stated like that in the prospectus, then the risks are indeed present right?

Again, if I’m wrong, do educate me.

Any other unit trust agents out there, feel free to chip in as well.

While we wait, let’s enjoy a song by Dafi entitled “Bila Terasa Rindu”… The song is dedicated to my business partner. I know you like this song! Haha.



Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.

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