10 Types of Islamic Investments in Malaysia (that Everyone Can Get)

My relationship with Islam the religion may be complicated, but I’m ALL for Islamic finance. During Securities Commissions Malaysia’s SCxSC 2019 Fintech Conference event, 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.

Conventional finance can be so predatory – yes, predatory – and I love how Islamic finance and banking is structured in a for-the-good-of-all way, even though admittedly things are never perfect in practice.

When it comes to Islamic investments, I admit I do have a big preference to Syariah-compliant investments. Not ALL of my investments are halal, but most of them are. I’m a work in progress, as we all are.

Throughout the years, I’ve made my notes when it comes to Islamic investment 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-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.
  2. Non-Muslims can get Islamic investments. 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 Syariah-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 believe them, even if there may be conflicting views about the ‘Islamic-ness’ of it all.

With that in mind, let’s start.

#1 – Mutual Funds/Unit trusts/ETFs

(they are three distinct things but similar enough that I’m grouping them together)

As far as I’m aware, all mutual funds in ASNB – Amanah Saham Nasional Berhad – are Syariah-compliant.

(In fact, there is even a ‘harus’ fatwa for ASN/ASB funds!)

islamic investment in malaysia

Tabung Haji investment is of course Syariah-compliant. As far as I know, they’re also the only one which also sort out zakat contribution from your investment profits on your behalf.

As for other mutual funds/unit trusts, you can generally (but not always) find out if the fund is syariah-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.

islamic investment in malaysia

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

I got my PRS (think of it like an optional EPF) from Fundsupermart. They make it easy to look for syariah-compliant funds in their page. All I had to do is check the button in the red box.

islamic investment in malaysia

Not sure about other platforms offering funds to retail investors (that’s people like you and me), so I would appreciate you sharing how different providers work.

As for ETF, or Exchange-Traded Funds, you can get Syariah-compliant funds from exactly one roboadvisory platform or from Bursa Malaysia. See Guide: How and Where to Invest in ETFs in Malaysia article for more info.

I have all investments here – I have ASB (and ASB financing), Tabung Haji (only the minimum RM1300 just to enter hajj queue), PRS (the fund isn’t doing great but I’m doing it to take advantage of up to RM3k tax relief) and the roboadvisory platform. If you decide to use Wahed Invest too, don’t forget to insert my referral code ‘surbin1‘ for $10/RM40 bonus!

Invest in ETFs through Bursa Malaysia

You can also invest in ETFs through Bursa. Quite a few companies offer them there, and I believe the number is growing. Click this link to view the offering of the day (scroll to the red box section for the list)

#2 – Fixed deposits

It’s super simple to identify Syariah-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’

islamic investment in malaysia

I’m not a fan of fixed deposits but that’s only due to my (relatively young) age. When my focus is more to wealth preservation, I might diversify in FDs.

#3 – Property/REITs (Real Estate Investment Trusts)

For an actual house/office/land/whatever, they’re all halal in theory. As long as you don’t buy it with dirty money*, and don’t use it for non-syariah activities, you’re good.

(Dirty money – money gained from corruption, taking bribes, gambling, alcohol, human trafficking, things like that)

As for REITs, according to Securities Commissions Malaysia’s List of Shariah-Compliant Securities by SC’s Shariah Advisory Council page and Bursa Malaysia’s i-REITs page, only 4 REITs (out of 18 or so REITs) are Syariah-Compliant as of time of writing (Nov 2019). They are:

  • Al-‘Aqar Healthcare REIT
  • Al-Salam Real Esrare Investment Trust
  • Axis-REIT
  • KLCC Property & REIT – Stapled Securities (I think this one is a fairly new addition!)

 islamic investment in malaysia

Related: 5 Things I Learned About REITs in Malaysia (From a Bursa Malaysia-Sponsored Workshop)

#4 – Stocks

There are literally hundreds of Syariah-compliant stocks in Malaysia to choose from. Refer to the List of Shariah-Compliant Securities by SC’s Shariah Advisory Council page for the most updated list. New companies kept being added in, and sometimes companies are taken out of the list.

You can kind of tell which company 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

So how do you find these stocks? Well, you look for Islamic POs (Participating Organisations) that offer Syariah Screening.

As of writing time, this is the list of Participating Organisations which conduct stockbroking business in accordance with Shariah principles as per Bursa Malaysia-i page:

  1. Affin Hwang Investment Bank Berhad
  2. AmInvestment Bank Berhad
  3. BIMB Securities Sdn Bhd
  4. CIMB Investment Bank Berhad
  5. Hong Leong Investment Bank Berhad
  6. Jupiter Securities Sdn Bhd
  7. Inter-Pacific Securities Sdn Bhd
  8. Kenanga Investment Bank Berhad
  9. Malacca Securities Sdn Bhd
  10. Maybank Investment Bank Berhad
  11. MIDF Amanah Investment Bank Berhad
  12. Public Investment Bank Berhad
  13. RHB Investment Bank Berhad
  14. TA Securities Holdings Berhad
  15. UOB Kay Hian Securities Sdn Bhd

Here’s how one of the POs – Kenanga Investment Bank – offers their Islamic investment selection. See KenTrade>Products> Islamic Stockbroking page.

 islamic investment in malaysia

Which PO should you pick? Honestly, I don’t know, I have not ventured into stocks investments yet. If you have, do share your recommendations in the comments section, so all of us can learn.

Related: DividendMagic Taught Me How to Read Financial Statements and Buy Stocks

#5 – Gold

As an investment, generally speaking, gold is super halal. In fact you can even say that Islam loooooves 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 clean money (as opposed to dirty money) 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

So here the best thing to do is just to get your gold via big big companies, like your banks.

 islamic investment in malaysia

Or from HelloGold, which is a fintech company (and thus much newer than the banks).

Check out some of my previous articles about gold here:

Investments #1-#5 are usually the first few investments of many people. If you haven’t even started investing, get one of those first. Also read my Pros & Cons List of 5 Popular Investments in Malaysia article.

I’m going to go super fast with other investment options now. I won’t go too in-depth with what they are, just their halal-ness. For more info, read my 12 Types of Investment Available in Malaysia and The People Who Have Them article.

#6 – Cryptocurrencies Digital Assets

As far as I understand, digital assets ownership within your own risk level is completely fine. But excessive risk taking – like having 90% of all your money in crypto or something – is considered not good already la.

Try not to do super risky moves like cryptocurrency 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.

#7 – P2P Lending

As far as I know, only ONE out of 11 registered P2P lending platforms in Malaysia is Syariah-compliant – Ethis Capital.

The one I’m using now, Funding Societies, is not Syariah-compliant, although valid sources told me that they *should* get the halal stamp soon. In which case, oh yay syukur I don’t have to change.

Related: [SPONSORED] I Asked Hard Questions to the CEO of Funding Societies Malaysia

#8 – Equity Crowdfunding (ECF)

As far as I know, there is ONE Syariah-compliant ECF platform out 10 registered ECF platforms in Malaysia, Ethis Ventures. But I guess, as long as you don’t put money in non-Syariah compliant companies, should be okay? Need more help here.

#9 – Art/Antiques/Jewellery

Use the clean/dirty money rule.

#10 – Fiat currencies

Ie money in other currencies, like keeping USD, Euro etc. The clean/dirty money rule applies here too.

Last Words

That should be most of the investment options available for Muslims in Malaysia. Am I missing any? Let me know in the comments section!

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, the pahala points will add up.

Please also help me gain more pahala points by sharing this article. You get the points too, God is generous like that.

Author

4 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!

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