halal investing
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5 Halal Investing Options in Malaysia

My relationship with Islam the religion may be complicated, but I’m ALL for halal investing. During an event on Shariah-compliant investments in Malaysia, someone said Islamic finance = ethical finance and gosh, that’s it, that’s why it’s always been appealing for me.

I love the underlying values behind it, like how usury (interest) or riba is completed prohibited, and how excessive risk-taking or gharar is not encouraged, and how maysir or gambling is forbidden. I also love how Islamic finance and banking are structured in the for-the-good-of-the-ummah outcome, even though admittedly things are never perfect in practice.

Throughout the years, I’ve made my notes when it comes to halal investing options in Malaysia. It’s far from comprehensive, but it’s time to share it with you. Hopefully it’ll help.

There are four notes I want to make here:

  1. Muslims can still make non-Shariah compliant investments. No one is going to stop you. There is no Islamic police who will arrest you or anything. It’s a personal choice.
  2. Non-Muslims can do halal investing in Malaysia. You absolutely can, no problem. The only downside is the selection is much smaller, and at times non-existent – warrants, futures, and options trading are all not Shariah-compliant. (Don’t @ me, this is completely true)
  3. Spellings may differ. For example, sometimes you’ll see Syariah, sometimes Shariah. Doesn’t matter, same thing.
  4. I’m taking it in good faith. Islam may be perfect (for believers), but Muslims are not. If Islamic finance experts and bodies gave an Islamic product the halal stamp, I’ll take their word, even if there may be conflicting views about the ‘Islamic-ness’ of it all.

With that in mind, let’s start.

#1 – Islamic Unit trust in Malaysia/ Mutual funds

There are a few types of Islamic unit trusts and mutual funds in Malaysia: ASNB funds (ASB and ASN), Tabung Haji, AHB (Amanah Hartanah Bumiputera), EPF/KWSP, and other unit trusts from various private fund management companies. Let’s go through them one by one. 

a) Tabung Haji

Tabung Haji is fully Shariah-compliant. They will also sort out and pay zakat contribution from your investment profits on your behalf.

b) ASNB funds

The most popular ASNB (Amanah Saham Nasional Berhad) funds are ASB (Amanah Saham Bumiputera) and ASN (Amanah Saham Nasional). Even though a significant chunk of the fund is invested in non-Shariah compliant assets, it received the ‘harus’ fatwa from the National Fatwa Council.

c) AHB (Amanah Hartanah Bumiputera)

AHB is fully Shariah-compliant. They will also sort out and pay zakat contribution from your investment profits on your behalf.

d) EPF/KWSP

EPF allows depositors to switch to Shariah account. You can do this via the EPF i-Akaun portal (see image below, #5)

(If not mistaken, accounts registered before 2017 are conventional accounts, by default. So if your EPF account is registered before then, you need to do the switch yourself manually. It’s a very simple process though)

e) Other Islamic unit trusts

As for other Islamic unit trusts, you can generally (but not always) find out if the fund is shariah-compliant or not by looking at the fund name. If it has the words ‘Shariah‘, ‘Islamic‘, and/or ‘Sukuk‘ (Islamic version of Bonds) in the name, it’s an Islamic investment.

halal investing

You can also tell that they’re Shariah-compliant investment if they use Arabic terms like Al-[name] in the name, or it’s issued by an Islamic fund management company, like AIIMAN.

#2 – Shariah-compliant stocks, indices, ETFs and REITs

It is easy to find Shariah-compliant stocks and equities to invest in. In Bursa Malaysia’s Bursa Suq Al-Sila’ page, you can find a list of:

  • Shariah-compliant Stocks (i-Stocks)List of Shariah-compliant securities
  • Shariah-compliant Indices (i-Indices)
  • Shariah-compliant Exchange-Traded Funds (i-ETFs)
  • Shariah-compliant Real Estate Investment Trusts (i-REITs)

Shariah-compliant stocks, indices, ETFs and REITs make up only a fraction of the overall stocks, indices, ETFs and REITs. For example, only 4 out of 18 REITs are Shariah-compliant investments. 

halal investing

All of the above halal investing options are managed by Bursa Malaysia Islamic Services Sdn Bhd (BMIS), a wholly-owned subsidiary of Bursa Malaysia which is regulated, transparent and fully Shariah-compliant. You can also find a list of Islamic Brokers, which you can get the stocks indices, ETFs and REITs from, in the same page. 

Important: The list is frequently updated. It is possible for companies to be added to the shariah-compliant list, or taken out of it. 

Note: Even though the financial instruments are Shariah-compliant, you still have to avoid Interest, Uncertainty and Gambling (Riba, Gharar and Maysir) as they are prohibited under Islamic Finance guidelines.

For example, using one’s life savings to invest in just one stock based on a rumor would be considered speculative bordering on gambling and therefore not encouraged, even if it is a Shariah-compliant stock. 

#3 – Fintech Platforms

Nowadays, there are a few Shariah-compliant fintech (combination of financial and technology) platforms. Some examples include:

  • Wahed Invest – a robo advisor platform originally from New York. I love it as they help you calculate your zakat pelaburan as well, making the purification process easy
  • Best Invest – a ‘robo intelligent’ platform by BIMB Investment, a Bank Islam subsidiary which also focuses on sustainable investing (ESG investing)
  • Ethis Co – An equity crowdfunding platform specialising in projects benefitting the ummah

The first two options are excellent for Muslim investors who want to diversify their investments easily, as they can guide and suggest various portfolios suitable to one’s risk appetite. They also have very affordable fees. 

The third option is great for Muslims who have reached financial freedom and would like to use their wealth to benefit society.

#4 – Fixed deposits

It’s super simple to identify Shariah-compliant fixed deposits in Malaysia. All you have to do is make sure the fixed deposit name ends with ‘-i’.

iMoney.my makes fixed deposit product comparison easy. You can just enable the button in the red box, the one that says ‘Show Islamic Products Only’

halal investing

#5 – Assets

There are various types of assets that Muslims can invest in and profit from capital gain and/or dividend and/or revenue. Some examples include gold, property and more. Let’s cover a bit about them:

a) Gold

As an investment, generally speaking, gold is super halal. In fact you can even say that Islam LOVES gold. So much that the State of Kelantan wants to be more Islam by trying to promote gold dinars and dirhams usage as legal tender.

Physical gold‘s halal status is easy enough to determine. Like property, all gold jewelry, coins, bars, etc, must be bought with halal income/salary and it’s halal.

With e-gold or digital gold or gold investment accounts though, it can be a bit trickier to determine. Unethical parties HAVE used the gold name to promote Ponzi schemes, or sometimes claim that they have the gold but in fact, don’t. (A requirement to halal status is the company MUST have the gold in their possession. It can’t be some ‘hypothetical’ gold).

Gold scams happen fairly often, which is sad.

islamic investment in malaysia

b) Property

Properties, whether house or land is considered shariah-compliant investment provided it is not obtained via illegal or unethical means, nor used for illegal or unethical purposes.

One should also be mindful to take Islamic finance products (ie Islamic loans and takaful) instead of conventional when purchasing and managing said properties. 

c) Other assets

For other assets or investments without the Shariah-compliant label or certification, it is wise to refer back to Islamic Finance guidelines – it’ll tell you whether the investment fits the Islamic investment criteria by its activities. According to Bursa Malaysia, companies will be deemed as Shariah non-compliant if they are involved in the following core activities:

  • Financial services based on riba (interest);
  • Gaming and gambling;
  • Manufacture or sale of non-halal products or related products;
  • Conventional insurance;
  • Entertainment activities that are non-permissible according to Shariah;
  • Manufacture or sale of tobacco-based products or related products;
  • Stock broking or share trading on Shariah non-compliant securities,
  • and Other activities deemed non-permissible according to Shariah

Is cryptocurrency halal investment?

Some types of assets may have conflicting fatwas depending on their usage. For example, there are various fatwas on cryptocurrencies/ digital assets, with some fatwa councils in some countries issuing the ‘haram’ ruling, while others giving guidelines on cryptocurrency zakat (thus implying permissibility). 

Therefore, fatwas must be taken into context – for example, cryptocurrencies may be viewed as haram if used for overly speculative or risky activities, such as trading with leverage. If you don’t know what you’re doing – and most people don’t – it’s just borderline gambling and therefore haram.

Halal investments I personally have

Halal investments that I personally do for myself are:

If you’re new to investing, I suggest starting with this article: 3 Best Investments in Malaysia (+ The Best Way to Invest Your Money). It tells you which investments to prioritise first and general guidelines before doing risky investments

(Disclaimer – none of these should be taken as personalised investment advice)

Any other halal investing options in Malaysia?

That should be most of the halal investing options available in Malaysia, for Muslims and our friends.

At this point in my life, not ALL of my investments are halal, but most of them are. I’m a work in progress, as we all are. Please help me to improve this article – I’m no Islamic finance expert, just a passionate student. I’m also someone who sins a lot and tries her best to make up for it by writing (hopefully helpful) articles like these. God willing, my pahala points – and yours – will add up 🙂

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25 Comments

  1. I love this article! I recently got into personal finances and I made a mistake in investing in non-Syariah compliant stocks because in the beginning it didn’t cross my mind. Had to sell them when I realised it.

    Hope to read more about Halal investment strategies.

    1. Hi Ikiray,

      Thanks for sharing and for your kind words! Which stocks did you get (and sold off)? Hope you didn’t lose too much during the process.

      Good website you have over there at howtolemons.com!

      1. I bought IGBREITS in the beginning because it had a higher dividend yield. Sold it off and bought AXISREITS afterwards.

        Luckily only lost around RM100.

  2. Thanks for sharing Suraya! Much needed. But, why do you say you have a complicated with Islam, I become sad when I read it so. Islam means submission, you must trust Allah for you to feel peace with this religion, (trust and submit your faith towards Allah). I don’t mean to be judgmental. If anything, this comes from a good intention from a fellow Muslim to another Muslim ☺️. I enjoy your content as always.

    1. Hi Akma,

      Thanks for your well-wishes 🙂 But here’s my counter-argument – doesn’t it mean something that I choose to follow this path which is still hard for me? It’s okay to admit its not always easy

  3. Thanks Suraya for sharing the useful information on this article, I just wanted to ask if any of the ETF options that you mentioned are available for people from outside Malaysia and are not Malaysian citizens ?
    And any reference where I can check the performance of those funds over the last few years ?
    Thanks

  4. Hi Suraya

    Is there a step by step guide on how to transfer from Maybank2U to Wahed Securities? Can you point me to the website or write one? I am having problem doing so even with the account details e-mailed by Wahed Securities. Thank you in advance.

  5. Thank you for the excellent article.

    Do you know where I can find a step by step guide on doing transfer to Wahed Securities via Maybank2u online banking?

  6. Hi Suraya,

    You mentioned Funding Societies should get their “Halal Stamp” soon. I read somewhere that they have applied for approval but for some ‘Riba-free’ lending solutions… Sharia-compliant lending I suppose (microLeap offers both Sharia-compliant & Conventional ).

    Would you know if any of the others are moving towards this approach?

    1. Hi Amiruddin,

      I didn’t know about microLeap offering Shariah option, thanks, will check them out!

      Don’t know much about FS’s update. Been checking in my account once in a while, no news yet :/

  7. “Muslims can still make non-Syariah compliant investments. No one is going to stop you. There is no Islamic police who will arrest you or anything. It’s a personal choice.”

    My two cents. In principal, regardless whether there is no Islamic police or not, Muslims should always invest in Syariah compliant investments. To not do so goes against the principals of Islam.

  8. Just few things to note:

    1) for stocks, just because they don’t participate in impermissible businesses, does not necessarily mean it’s shariah compliant. There is a leverage requirement which states they should not have more than 1/3 of their capital funded by debt. Same applies to equity crowdfunding.

    2) for fiat currencies, please note the instruments that is being used to invest in those currencies. If it’s a direct 1:1 purchase, it’s permissable. But if you are trading it, most brokerage use an instrument called CFD, which just like any derivative product, are not permissable.

    3)digital currencies – there are no strong fatwas to say it’s halal or haram but most local and international scholars are leaning towards haram. Which makes sense due to the speculative nature of crypto and the lack of physical asset. Also, if it’s dealt with great uncertainty, the default judgement is makruh or impermissible.

    1. Hi Bart,

      I personally wouldn’t, but only because I don’t like sales agent system where they ask you to buy a big amount of their product to become a sales agent

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