Ethical screening process

Eternal Asset Management has developed its own proprietary Ultra-Ethical Code of Governance (UECG) which is a Sharia rule-based framework designed to be applied to the suite of Investment funds operating in partnership with Eternal Asset Management.

The Ultra-Ethical Code of Governance (UECG) outlines the Sharia Ethical Standards that all Funds will abide by and develops and details the Sharia Ethical Screens that will be applied during the investment selection process for all investments held by the different Funds.

Excluded Investments

We take our screening process seriously.

Alcohol

Pig and related by-products

Gambling

Anti-social and immoral goods such as tobacco, pornography, drugs, etc.;

Armaments and destructive weapons

Riba (Interest)

Four Principles Of Islamic Investing Are

Avoiding Gharar (Excessive Uncertainty)

Gharar refers to any element of absolute or excessive uncertainty in any business or contract. Gharar may lead to undue loss to a party and unjustified enrichment of another, and is prohibited under Islamic principles. As all business involves some level of risk, a certain level of uncertainty is tolerated. In contrast, where referring to deceit or fraud, gharar is an absolute concept.

Avoiding Riba (Prohibition of interest or usury)

The charging and receiving of interest are strictly forbidden by Islamic Law. This is commonly referred to as riba or usury. If a positive, fixed, predetermined rate is attached to the maturity and the amount of principal (i.e. a guaranteed rate regardless of the performance of the investment), it will be considered riba and is prohibited. The general consensus among Islamic scholars is that riba covers not only usury but also the charging of “interest” as widely practised. Riba encompasses any return of money on money, regardless of whether the interest is fixed or floating, simple or compounded, and at any rate.

Avoiding Impermissible Investments

Islamic principles prohibit investment in corporations involved in business activities deemed impermissible under conventional Islamic law. Non-Permissible business activities include the manufacturing or marketing of such products or services as alcohol, pork, tobacco, pornography, prostitution, gambling, weaponry and many forms of entertainment and advertising that are contrary to Muslim values.

Avoiding Maisir (Speculation)

The principle of maisir prohibits speculation or gambling. It is prohibited in Islamic finance to create wealth from chance instead of productive activity.

This principle is the basis for disallowing speculative practices, including conventional insurance. It also prohibits derivatives, forwards, options and futures, which are all considered a form of gambling.