Why consider Franklin Templeton for Shariah-compliant investing?

For more than 75 years, Franklin Templeton has been developing client-focused solutions to meet the needs of investors worldwide. We combine this experience with strict adherence to the financial principles of Islamic law to offer customised Shariah-compliant portfolios across a range of asset classes.

Today, we are one of the very few global Shariah asset managers, with investment professionals located in global Sukuk issuance hubs – Kuala Lumpur, Dubai and Riyadh, supported by the analysis and insight of a global network of 200+ investment, trading and risk professionals.

40,000

Securities screened

35+

Years of Islamic investing

$4.8bn*

Shariah assets

* As at 30/09/25.

Our approach

Independent endorsement from an esteemed board of scholars

Our portfolios are independently reviewed and endorsed by the Amanie International Shariah Supervisory Board. They are recognised experts in this field and highly regarded for their extensive Shariah and technical understanding. The Amanie scholars provide initial approval on investment objectives and strategy, as well as ongoing supervisory and monitoring services to maintain adherence to internationally accepted Shariah principles and standards.

World-class screening technology and process

To help ensure compliance with Shariah guidelines, Franklin Templeton leverages best-in-class technology using criteria established by our Shariah screening provider. Approximately 40,000 global securities are screened by IdealRatings using a rigorous process that drills down to a granular level on the business activities of every company being researched.

In addition, selected financial ratios are assessed using prescribed algorithms with the aim of ensuring Shariah compliance.

Comprehensive, integrated risk management

Each portfolio team employs a disciplined investment process designed to measure and manage risk. In addition to investment team-specific risk management practices, they leverage analysis and insight from our worldwide network of locally based risk management specialists.

Trading/Investment infrastructure

We have well-functioning and robust infrastructure in place for Shariah investing, with the right technology for effective screening and enabling processes. Our global footprint with 24/7 trading across global markets facilitates Shariah-compliant risk management across funds and mandates (Shariah-compliant profit-rate swaps, FX forwards, and options). This allows for multi-asset funds, private markets and outcome-oriented strategies.

Investment benefits of a Shariah strategy

A Shariah-compliant investment may be seen as a basic building block.
It can add diversification to an investment portfolio and can potentially provide growth whilst reducing volatility (the ups and downs of an investment’s price/value).

It provides the opportunity to contribute to the strengthening of global Islamic finance.
Shariah-compliant investments provide funding for projects in Islamic societies across the world which aim to enhance the living standards and economic growth within these societies.

It gives access to Islamic assets and MENASA¹ economies.
A pooled investment vehicle, such as a mutual fund, provides easy access to a market which can be difficult for individual investors to enter.

You can participate in a rapidly growing financial sector.
Islamic finance grew by a compound annual growth rate of 8.8% between 2011 and 2021. By the end of 2022, worldwide investments stood at US$3 trillion².

It’s ethical.
Shariah-compliant investments are based on specific religious principles and guidelines. These include the exclusion of gambling, alcohol, tobacco, and the prevention of usury (charging interest). So, it gives built-in access to an ethical investing style.

Featured Strategy

The strategy aims to maximise total investment returns by investing principally in a portfolio of fixed- and floating-rate Shariah-compliant securities (including non-investment grade securities), including Sukuk, Murabaha and Wakala placements, and other short-term instruments issued by government, government-related and corporate entities located in developed and developing countries.

Contact us

At Franklin Templeton, we combine extensive global investment expertise with the knowledge and advice of Shariah scholars. This helps us deliver customised Shariah-compliant portfolios focused on clients’ investment aspirations.

To discuss how we may help you meet your Shariah-compliant investment goals, please contact your local Franklin Templeton representative.

How does Shariah-compliant investing work?

First and foremost, it is governed by the requirements of Shariah law and the principles of the Islamic religion.

Islamic teachings have do’s and don'ts. In Arabic, "Halal" means "permitted," while "Haram" means "prohibited."

A Shariah-compliant investment includes Halal industries and excludes Haram industries, such as those selling prohibited goods, for example tobacco or alcohol.

There are specific investment considerations when screening for exclusions in a Shariah-compliant investment: Gharar, Maisir and Riba.

Gharar

Participation with excessive risk or uncertainty

Maisir

Anything involving gambling or speculation

Riba

Receiving interest on investments

Because of Riba, Shariah-compliant investors can’t hold interest-paying bonds. Instead, the asset manager buys a Sukuk. This is an Islamic financial certificate that complies with Shariah laws.

The issuer of a Sukuk essentially sells a certificate and then uses the proceeds to purchase an asset that the investor has partial ownership of. Benefits for the investor are through profit sharing, and not interest. The issuer must also make a contractual promise to buy back the certificate at face value at a future date.

A Shariah-compliant mutual fund will also have a Shariah Board. This will comprise Islamic scholars who research and decide which companies meet the rules for investment.

A final point to note pertains to quantitative exclusions related to debt. For example, companies with more than 1/3 debt/equity will be excluded. This reduces portfolio risk.

Footnotes

Middle East, North Africa and South Asia (MENASA).
Source: Islamic Financial Services Industry Stability Report 2022.

Important Legal Information

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. All investments involve risks, including possible loss of principal. There is no guarantee that a strategy will meet its objective. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where a strategy invests in emerging markets, the risks can be greater than in developed markets. Where a strategy invests in derivative instruments, this entails specific risks that may increase the risk profile of the strategy. Where a strategy invests in a specific sector or geographical area, the returns may be more volatile than a more diversified strategy.

This site is intended only for EMEA Institutional Investors. Using it means you agree to our Anti-Corruption Policy.

If you would like information on Franklin Templeton’s retail mutual funds, please visit www.franklinresources.com to be directed to your local Franklin Templeton website.