BONANZA PRAGMATIC SHARIAH FUND (BPS-FUND)
The Indian equity market offers incredible avenue for Shariah compliant investments.
At present, it offers a best alternative, perhaps the only alternative to the Indian
Muslim investors (Rabbul- Mal) who would like to invest their saving in Shariah
manner, because of absence of islamically permissible financial assets such as,
deposits with Islamic financial institutions. The Indian equity market, with its
enormous potential for growth, competes favorably with global portfolio managers
and high-worth individual investors. The funds that are waiting to be invested domestically
could be staggering, given the sheer size of Indian Muslim population over 160 million.
Every Individual has their own specific financial need and expectation based on
their risk taking potential, whereas some needs and expectation are common. The
evaluation of financial planning has been increased through decades, with emergence
of professional attitude and specialization.
The objective of the strategy is to secure long term gains from the investments
in the combination of large and mid size companies which are Shariah compliant.
It excludes investments in the industries like Banking, Liquor, Tobacco, pork, Entertainment,
NBFCs and Securities trading business etc.
The investments through the fund will be purely delivery based and no intraday trading
or derivative trading will be done. Investment will be done in those companies whose
business is permissible (Halal) from Shariah point of view and also fulfilling the
criteria set by Shariah Board. The core objective behind this philosophy is to provide
an ethically sound and socially responsible avenue of the investment to the people.
The stocks invested in equity will be selected from the top 251 Shariah complaint
stocks selected by Pragmatic wealth management P.Ltd (PWM) in accordance to Shariah
norms, comprising Large, Mid and Small size companies. The market capitalization
of these 251 companies is well over 60 percent of the Bombay Stock Exchange. This
universe of 251 stocks is the part of ITE Shariah- 251 index develop by PWM and
it is in the lines of BSE- 500 and Nifty 500.The fund will be investing in Islamically
permissible companies with minimum market capitalization of 1000 crores.
Fund Allocation & Risk Management
Investment in one Sector will not be more than 25 percent of the fund, and each
individual stock will not be more than10 percent of the fund. Investment will not
be done in any debt based instruments. Drop down policies are well defined.
Fee and Charges
- Brokerage and DP charges – 0.30 percent will charge on each transaction. the DP charges as applicable
- Performance Fee - Taken for every six monthly on average Net Asset Value of the Portfolio.
The performance fees will be as following:
- Profit up to 20 percent the fees charged will be 10 percent of the profit
- Profit above 20 percent the fees charged will be 15 percent on the incremental profit above 20 percent
- Pre-Closure Fee - Charged only for investors making full withdrawal of funds before the completion of six months duration from the date of opening of Demat account. They will be subject to 0.50 or half percent pre closure fees.
WHAT IS SHARIAH COMPLAINT INVESTMENT?
Shariah Laws aim to set ethical standard to promote welfare and protection of investors
there for Shariah has prohibited investment in the industry manufacturing wine,
pork, tobacco and its related products etc and services sectors like Interest based
banks, NBFC, Insurance, entertainment, cinema, music etc. we all know that everyone
of us is interested to have healthy, clean and transparent life that is why Shariah
fund are for your services.
Looking into the need to invest in equity markets, Shariah scholars have imposed
certain restriction and stipulated conditions if these are met then one can invest
in equity markets the permissible (Halal) way
- Restriction Based on the Type of Securities: Investment is done in Shariah compliant
stocks. Securities trading in derivatives and intraday trading in stocks are strictly
not permitted. Short selling is completely prohibited. Stocks will be sold upon
having its complete possession.
Restriction on Business Activity: Investment shall not be done in stocks of the companies whose business activity is prohibited like the Conventional interest based banks, NBFC, Insurance companies, securities trading companies, Entertainment includes film production companies, cinema, Cable TV, music etc. Alcoholic beverages like wine and liquor, tobacco and its related products, Pork and non- Halal food products companies.
Restriction Based on Financial ratios:
- Interest bearing debt of the companies should not exceed 33 percent of its twelve months average market capitalization.
- Cash plus interest bearing securities of the companies should not exceed 33 percent of its twelve months average market capitalization.
- Trade receivable and other debtors of the companies should not exceed 33 percent of its twelve months average market capitalization.
- Interest Income plus any impure income of the companies to its company's total income should not exceed 5 percent.
- Purification of Impure Income: The profit thus derived from Shariah PMS in needs be purified (purged) and given as charity. (We provide this value added to our client )
SCOPE FOR ISLAMIC INVESTMENTS
With sound economic base and with hundreds of companies complying with Shariah norms,
India offers a huge opportunity for Islamic equity investment. If performance as
a parameter is considered, it is observed that Shariah complaint investment being
low in debt and having sound fundamental principles tend to perform better, hence
large non- muslim investors should take the benefit of this socially responsible
and above par performing Islamic investments, moreover India, being world's largest
democracy, young population, high quality entrepreneurs, vigilant & vibrant regulators
gives a clear advantage. India is not only one of the fastest growing economies
in the world that offers an excellent investment opportunity on a massive scale.