Islamic Fund Management
18
Type of Fund by
Investment Portfolio
Description Assets Invested In
Money Market Fund Invests in short-term money market securities
(one year or less) and aims mainly to preserve
its principal capital and generate a modest
income for the unit holders. Commonly
deemed as safe as bank deposits, but with a
higher yield. Extremely liquid; investors can
withdraw their money at any time, with almost
no risk of loss of principal.
Islamic money market funds invest in short-
term sukuk and other investment instruments.
Short-term treasury
bills, debentures,
commercial papers.
Short-term sukuk for
Islamic money
market funds.
Fixed-Income Fund Its main objective is to generate a flow of fixed
income.
The government,
municipal and
corporate debt
obligations
, money market
instruments, and
dividend-paying
stocks.
Sukuk and dividend-
paying stocks for
Islamic fixed-income
funds.
Balanced or Mixed
Fund
Its investment objective is to attain a mix of
safety, income and capital
appreciation/growth while avoiding excessive
risk. Investment in each asset class usually
must remain within the minimum and
maximum ratios.
Mix of stocks (for
growth), bonds,
money market
instruments or other
fixed-income
instruments (for
income).
Shariah-compliant
stocks and sukuk for
Islamic balanced
funds.
Index Fund The investment portfolio is constructed to
match or track the components of a market
index. It, therefore, aims to replicate the
performance of a benchmark index, regardless
of market conditions. This type of fund falls
within the category of passive investing.
Invest in all the
constituents of the
market index or
representative
securities of the
market index.
Fund of Funds Invests in units/shares of other investment
funds instead of investing directly in stocks,
bonds or other securities. This investment
strategy is also known as a multi-manager
investment, where investments in a variety of
funds are all bundled into a single fund.
Diversification can be achieved by investing in
Units of other funds.