Exploring Islamic Investment in Malaysia

Islamic investing, or halal investing, is a values-driven financial approach guided by Shariah principles. It prohibits interest (riba), excessive uncertainty (gharar), and speculation or gambling (maysir), and instead focuses on supporting real, productive businesses that generate economic and social value.

This means investing in companies and financial instruments that are ethical, asset-backed, and free from exploitative practices.

Unlike conventional investing, Islamic investing isn’t just about avoiding certain industries—it’s about aligning capital with a broader purpose: one that promotes fairness, shared risk, and sustainable outcomes. Investors are encouraged to support businesses that operate transparently and contribute positively to society.

Malaysia is one of the most advanced Islamic finance markets in the world. Backed by a strong regulatory framework from the Securities Commission Malaysia (SC), investors here can access a full suite of Shariah-compliant investment options—from screened equities and sukuk (Islamic bonds) to i-REITs, Shariah ETFs, and even digital robo-advisors that offer halal portfolios.

Malaysia’s Islamic finance landscape in 2025:

• RM2.6 trillion in Islamic capital market size, growing 8.5% year-on-year, according to SC report
• 80% of Bursa Malaysia-listed securities are Shariah-compliant (850 out of 1056) - List of Shariah Compliant Securities as of 30 May 2025
• Around 63% of the exchange’s market capitalisation is halal-aligned, as reported by Bursa Malaysia
• 46.6% of Malaysia’s total financing is now through Islamic banking according to Bank Negara

With both depth and diversity across asset classes, Malaysia offers one of the most accessible and sophisticated environments globally for building a Shariah-compliant portfolio—whether you're a first-time investor or a seasoned allocator.

What is Islamic (halal) investing?

Islamic investing, or halal investing, is a form of socially responsible investing (SRI) that follows the principles of Islamic law (Shariah). It aims to generate ethical returns without compromising religious obligations, and is rooted in the overarching framework of Maqāṣid al-Shariah—the higher objectives of Islamic law.

These objectives emphasise the preservation and protection of:

• Faith (din)
• Life (nafs)
• Intellect (‘aql)
• Lineage (nasl)
• Wealth (mal)

In practice, every Shariah-compliant investment should either contribute positively or, at a minimum, avoid harm to these five areas.

For instance, investing in healthcare companies supports life preservation, while investing in education aligns with protecting intellect.

Invest with purpose through Shariah Portfolios

If you're committed to aligning your wealth with Islamic principles, consider StashAway’s Shariah-compliant Global Portfolios. These portfolios provide globally diversified exposure to halal ETFs across equities, sukuk, and gold, all certified by Masryef Advisory, a recognised Shariah advisory firm registered with the Securities Commission Malaysia.

Designed to exclude prohibited sectors and include purification as needed, StashAway makes ethical investing accessible, transparent, and hassle-free—ideal for achieving your retirement, pilgrimage, or long-term savings goals while staying grounded in your values.

The three core prohibitions in Islamic investing

To understand what makes an investment halal, it’s essential to recognise the three key elements that Islamic finance prohibits. These rules are not just religious formalities—they aim to build a more just, transparent, and risk-conscious financial system.

1. Riba (interest or usury)

The most critical prohibition, riba refers to earning a guaranteed, fixed return—such as interest on loans—without taking on any risk. It is seen as exploitative because the lender profits regardless of whether the borrower succeeds or fails.

Prohibited instruments include:

• Conventional bonds
• Fixed deposits
• GICs
• Stocks of banks and insurance companies that rely heavily on interest-based income

2. Gharar (excessive uncertainty)

Gharar refers to contracts or transactions that are vague, ambiguous, or contain hidden risks. Islamic law requires clarity and fairness in all contractual terms to avoid disputes and exploitation.

Prohibited activities include:

• Derivatives trading with unclear outcomes
• Short-selling
• Insurance contracts without clear payout terms
• Speculative structures that rely on chance rather than value creation

3. Maysir (gambling or speculation)

Maysir involves earning profit purely by chance, rather than through productive effort or informed risk-taking. It creates zero-sum outcomes, where one party’s gain comes at another’s direct loss.

Prohibited examples include:

• Gambling operators
• Lottery and betting platforms
• High-frequency speculative trades
• Assets traded for pure price speculation without economic purpose

The building blocks of Islamic investing: permitted contracts

Instead of interest-bearing debt, Islamic finance is built on ethical contracts that encourage partnership, trade, and shared risk. These contracts form the foundation of many Islamic financial products—from sukuk to unit trusts and i-REITs.

Each of these contracts ensures that capital is linked to real, productive assets, and that returns are earned through transparent, value-creating activities, not passive interest or speculation.

Shariah screening process (Malaysia)

For an investment to be deemed halal, it must pass a strict Shariah screening process to ensure it complies with Islamic principles.

In Malaysia, this framework is defined and overseen by the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC)—widely regarded as one of the most robust and transparent regulatory authorities in the global Islamic capital market.

The SC’s methodology is respected globally for its clarity, consistency, and dual-layer screening approach that covers both business activities and financial structure.

The two-tier Shariah screening method consists of:

1. Quantitative thresholds: Assessing revenue and financial ratios
2. Qualitative review: Evaluating a company’s ethical image and societal impact

To qualify, a company must pass both tiers and is then included in the List of Shariah-Compliant Securities, which is updated biannually in May and November.

Tier 1: business activity benchmarks

This first layer screens companies based on revenue or profit contribution from non-compliant business activities.

• 5% threshold: Applies to clearly prohibited activities such as:
  - Conventional banking and insurance.
  - Gambling.
  - Alcohol and liquor-related activities.
  - Pork and non-halal food production.
  - Tobacco.
  - Shariah non-compliant entertainment (e.g. nightclubs).
  - Adult content and morally objectionable services.

• Example: If more than 5% of a company’s revenue comes from liquor sales, it is excluded.

• 20% threshold: Applies to tolerated but discouraged activities, including:.
  - Brokerage income from non-compliant securities.
  - Rental from properties used for non-permissible activities.
  - Hotel operations involving alcohol sales or non-compliant services.

• The higher tolerance reflects grey-area income that may be mitigated through dividend purification.

Tier 2: financial ratio benchmarks

Once the business activities are deemed acceptable, the company’s balance sheet is screened for exposure to conventional finance.

To qualify, both of the following ratios must be below 33%:

• Cash over total assets
  Measures the proportion of interest-bearing cash or deposits (e.g. in conventional banks). Excludes Islamic accounts or instruments.
• Debt over total assets
  Captures how much of the company’s financing comes from interest-bearing loans or bonds. Excludes sukuk or other Shariah-compliant financing.

Why 33%?
Islamic scholars consider one-third a significant portion. Anything above this suggests excessive reliance on riba-based elements.

Global screening standards and purification practices

While Malaysia’s SAC-SC is the standard for local investors, global Shariah indices and standards—like those from AAOIFI, S&P Dow Jones, and MSCI—apply similar screening logic, though with slight variations in thresholds and definitions.

Key global features:

• Screening still involves business activity and financial ratio filters
• There may be differences in revenue thresholds or how interest income is classified
• Most global standards require dividend purification, even if a company passes the screen

What is dividend purification?

Even Shariah-compliant companies may earn a small portion of income from incidental non-compliant sources—for example, interest earned on overnight deposits.

Purification means:

• Identifying the non-compliant portion
• Donating it to charity
• Avoiding personal use

Reputable Shariah fund managers and ETF providers often publish purification ratios to guide investors. AAOIFI-compliant investors are required to purify dividends based on these ratios.

Instruments in an Islamic investment portfolio 

Malaysia offers a complete ecosystem of Shariah-compliant financial instruments, enabling investors to construct diversified halal portfolios across equity, fixed income, real estate, retirement, and digital assets. 

All instruments below comply with Islamic finance principles as regulated by the Securities Commission Malaysia (SC).

1. Shariah-compliant stocks (equities)

Shariah-compliant stocks, often referred to as i-Stocks, are shares of companies listed on Bursa Malaysia that meet the screening criteria set by the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC). 

These companies must pass a rigorous two-tier Shariah screening process based on business activity thresholds and financial ratio benchmarks to ensure they do not derive significant income from non-permissible activities such as conventional banking, gambling, or alcohol. 

As of May 2025, 850 out of 1,056 listed securities on Bursa Malaysia are classified as Shariah-compliant by the SAC of the SC, covering approximately 80% of total listed companies.

The SC updates the official List of Shariah-Compliant Securities biannually, in May and November, based on the companies’ most recent audited financial statements. 

Investors can access i-Stocks through any licensed stockbroking platform that supports Islamic trading accounts, such as Maybank-i, BIMB Securities, or Rakuten Trade.

Key indices:

• FTSE Bursa Malaysia Hijrah Shariah Index – 30 largest Shariah-compliant Malaysian stocks
• Dow Jones Islamic Market (DJIM) Malaysia Titans 25 Index – 25 leading Shariah-compliant Malaysian companies

2. Sukuk (Islamic investment certificates)

Sukuk are Shariah-compliant investment certificates that represent ownership in real assets or ventures, rather than debt obligations. 

Instead of interest (which is prohibited in Islam), sukuk investors receive returns derived from profit-sharing, rental income, or business revenue tied to the underlying assets.

Malaysia is the global leader in sukuk issuance, accounting for about  36% share of global sukuk issuance as of 2024.

Where can retail investors buy sukuk?

Retail investors in Malaysia can access sukuk through several regulated channels:

A. Bursa Malaysia (via the Exchange Traded Bonds and Sukuk [ETBS] platform)

• Sukuk are listed under the ETBS segment of Bursa Malaysia.
• Investors can buy them using any stockbroker or CDS account, just like they would buy equities or i-ETFs.

B. Islamic bond unit trust funds

• Available from fund houses such as Principal Asset Management, Public Mutual, RHB Islamic, and Kenanga Investors.
• These funds pool investor capital to invest in a diversified portfolio of sukuk.
• Accessible via platforms like FSMOne, iFAST, or directly from fund managers.

C. Robo-advisors and digital investment platforms

• Platforms like StashAway include sukuk exposure in their Shariah-compliant portfolios through ETFs and sukuk funds.
• These platforms automate portfolio allocation and rebalancing based on investor risk preferences.

D. Over-the-counter (OTC) sukuk

• Some Islamic banks and licensed financial institutions offer direct sukuk placements to clients.
• These typically require larger minimum investments (e.g., RM5,000 to RM100,000).

What sukuk can be bought?

Some examples of sukuk available to Malaysian retail investors include:

Sukuk listed on Bursa Malaysia (ETBS):

• DanaInfra Nasional Berhad Sukuk – funds public infrastructure projects including MRT
• Cagamas Berhad Sukuk – Malaysia’s national mortgage corporation
• Prasarana Malaysia Sukuk – issued by the urban rail operator
• Khazanah Nasional Sukuk – sovereign wealth fund sukuk with strong ratings

These sukuk typically carry tenors between 5 to 10 years, with profit payments (coupons) made semi-annually or quarterly.

Through sukuk unit trust funds:

• Funds such as:
  - Principal Islamic Lifetime Sukuk Fund
  - RHB Islamic Bond Fund
  - Maybank Dana Arif

• These funds invest in a diversified mix of government, quasi-government, and corporate sukuk issued in Malaysia and other OIC countries.

Through ETFs:

• While Malaysia currently doesn't list a dedicated sukuk ETF locally, Malaysian investors can still gain exposure to global sukuk markets via internationally traded sukuk ETFs.

3. Islamic unit trust funds

Islamic unit trust funds are professionally managed investment vehicles that pool money from multiple investors to invest in Shariah-compliant assets, such as equities, sukuk, Islamic money market instruments, and occasionally gold-backed securities. 

These funds are overseen by appointed Shariah advisers and are regularly audited to ensure compliance with Islamic principles. The portfolio is screened to exclude riba (interest), gharar (excessive uncertainty), and maysir (gambling), and any incidental non-compliant income is purified via donation.

ASNB Shariah funds (for Bumiputera investors)

Offered by Amanah Saham Nasional Berhad (ASNB), these funds are backed by the Malaysian government and are structured under a harus fatwa, allowing Bumiputera investors access to capital-stable funds with consistent distributions.

• 2024 returns:
  - Amanah Saham Bumiputera (ASB): 5.75%
  - Amanah Saham Malaysia (ASM): 4.75%
  - Amanah Saham Nasional (ASN): 25.73%

• Minimum investment: RM10

• Popular access channels:
  - myASNB mobile app
  - Bank Islam and Bank Rakyat
  - Post offices and ASNB agents

Private Islamic unit trust funds

These are fully Shariah-compliant and available to all investors in Malaysia, offering a wide range of fund types suited for growth, income, or preservation.

• Fund categories:.
  - Equity funds (growth-oriented)
  - Sukuk funds (income-focused)
  - Balanced funds (mixed allocation)
  - Islamic money market funds (capital preservation).

• Popular fund providers:
  - Principal Asset Management
  - Public Mutual-
  - RHB Islamic
  - Kenanga Investors
  - Eastspring Investments.

• Minimum investment: RM1,000–RM10,000 (varies by fund)

• Access via:
  - Online platforms like FSMOne and iFAST
  - Fund house websites
  - Bank distribution channels

4. Shariah-compliant Private Retirement Scheme (PRS)

The Private Retirement Scheme (PRS) is a long-term, voluntary savings program designed to help Malaysians supplement their EPF savings. Shariah-compliant PRS funds follow the same Islamic investment principles as unit trusts and are reviewed by qualified Shariah advisers.

These funds invest in halal assets and offer allocation strategies based on investor age and risk tolerance.

Contributions to PRS are incentivised with personal tax relief of up to RM3,000 per year, and withdrawals are allowed upon reaching age 55.

Shariah PRS funds are offered in:

• Conservative (higher sukuk and cash allocation)
• Moderate (balanced equities and sukuk)
• Growth (higher equity exposure)

Key providers

• Principal PRS Plus Islamic
• Manulife PRS-Islamic
• CIMB-Principal Islamic PRS
• RHB Islamic PRS Fund

Access and investment details

• Minimum investment: RM100–RM500.

• Available through:
  - PRS providers’ mobile apps and websites
  - PPA (Private Pension Administrator) online portal
  - Licensed PRS consultants

5. Islamic ETFs (i-ETFs)

Shariah-compliant Exchange-Traded Funds (i-ETFs) are listed investment funds that track Shariah-compliant indices and are traded on Bursa Malaysia, combining the features of unit trusts and stocks. 

Unlike conventional ETFs, i-ETFs can only invest in securities that meet Islamic finance criteria, as verified by periodic Shariah screenings and overseen by a qualified Shariah advisory board.

i-ETFs are passively managed and aim to replicate the performance of specific halal indices using either full replication or strategic sampling. 

Investors can buy and sell i-ETFs like stocks through any licensed brokerage, with real-time pricing and transparent disclosures published by fund managers.

As of 2025, there are seven i-ETFs listed on the Malaysian exchange offering diversified exposure to domestic, regional, and global Shariah-compliant markets:

6. Islamic REITs (i-REITs)

Shariah-compliant REITs (i-REITs) are listed investment vehicles that pool investor funds to acquire and manage income-generating properties, while strictly adhering to Islamic principles. 

Unlike conventional REITs, i-REITs must ensure that rental income from non-permissible activities—such as gambling, alcohol, conventional banking, and tobacco—does not exceed 20%, and must be reduced to below 5% within ten financial years after listing. 

These requirements are governed by the Guidelines on Listed REITs and Islamic Capital Market Products and Services (ICMPS) Guidelines issued by the Securities Commission Malaysia.

i-REITs must distribute at least 90% of their total income annually to qualify for tax transparency. They offer stable returns via dividend distributions and provide an affordable entry point to the real estate market, without the need for direct property ownership. 

Investors can buy and sell i-REIT units on Bursa Malaysia through any CDS account, including those on Islamic stockbroking platforms. There are currently five i-REITs listed on Bursa Malaysia:

7. Digital investment platforms

Digital investment platforms, or robo-advisors, are online services that automate portfolio management using algorithms and data. 

In Malaysia, several robo-advisors now offer Shariah-compliant portfolios—designed to avoid investments in sectors like conventional finance, gambling, pork, alcohol, and other prohibited industries. 

One such offering is the StashAway Shariah Global Portfolios, a fully digital and regulated solution tailored for Muslim investors. These portfolios give access to a globally diversified mix of equities, gold, and sukuk—all carefully screened to meet Shariah standards. 

The portfolios are endorsed by Masryef Advisory, a Shariah advisory firm registered with the Securities Commission Malaysia (SC), ensuring credible oversight and periodic purification where required.

8. Tabung Haji

Tabung Haji is Malaysia’s dedicated Islamic savings institution established to help Muslims save for the Hajj pilgrimage in a Shariah-compliant manner. It operates under the Tabung Haji Act 1995 and is supervised by its own Shariah Advisory Panel.

Deposits in Tabung Haji are fully guaranteed by the Government of Malaysia, making it one of the safest savings vehicles for Muslim investors.

Unlike conventional savings accounts, all operations are structured around profit-sharing contracts and Islamic investments, including in sukuk, equities, and plantations.

• Profit distribution (2024): 3.25% (net, after zakat deduction)
• Zakat handled: Tabung Haji pays zakat on behalf of all depositors, meaning your savings are automatically zakat-compliant.
• Minimum to open: RM10
• Minimum to register for Hajj: RM1,300

Tabung Haji is unique in combining investment returns, Shariah compliance, and Hajj facilitation under one institutional roof.

9. Islamic savings and fixed deposits (FD-i)

Most Islamic banks in Malaysia offer a variety of savings and fixed-term accounts structured around Islamic contracts such as Qard (loan for safekeeping), Wadiah (custodianship), and Murabahah (cost-plus profit).

These products are free from interest and are governed by Shariah boards within each bank to ensure full compliance.

There are two key instruments under this category:

Islamic savings accounts

These accounts function similarly to conventional savings accounts but are based on either Wadiah Yad Dhamanah or Qard Hasan, meaning the bank holds your funds as a trust and may offer hibah (non-guaranteed gifts) as returns.

Islamic fixed deposits (FD-i)

FD-i products are structured using contracts like Murabahah, Wakalah, or Mudarabah. The customer agrees to invest a sum over a specific period, during which the bank uses the funds in halal financing activities.

• Indicative returns: 2.5%–3.5% p.a., depending on tenure and bank. 
• Minimum placement: Typically RM1,000; varies by bank. 

These instruments are protected under PIDM (Perbadanan Insurans Deposit Malaysia) up to RM250,000, adding a layer of security for retail savers.

10. Islamic money market (i-MMF)

Islamic Money Market Funds (i-MMFs) are short-term, low-risk investment vehicles that provide liquidity and capital preservation while complying with Shariah principles. These funds invest exclusively in Islamic treasury instruments, sukuk, Islamic commercial papers, and Islamic repurchase agreements (repo-i).

Designed for conservative investors or short-term cash parking, i-MMFs aim to provide slightly better returns than Islamic savings accounts or current accounts, while maintaining high liquidity and low volatility.

A notable retail-accessible product is: Go+ Finance via Touch ’n Go eWallet.

• Underlying fund: Principal Islamic Money Market Fund. Indicative return: ~3.4% p.a. (net of fees). 

i-MMFs do not guarantee returns or principal, but they are often seen as a flexible, Shariah-compliant alternative to conventional money market instruments—suitable for parking idle cash over short durations.

11. EPF Simpanan Shariah

Since 2017, Simpanan Shariah has been available to all Employees Provident Fund (EPF) members—Muslim or non-Muslim—as a fully Shariah-compliant alternative to Simpanan Konvensional. 

This scheme allows contributors to grow their retirement savings exclusively through halal investments.

Simpanan Shariah operates under Section 43A of the EPF Act 1991 and adheres to guidelines set by the EPF’s Shariah Advisory Committee, comprising independent scholars.

The investment portfolio excludes conventional financial instruments and sectors that contradict Islamic principles.

EPF dividends are declared annually based on each portfolio's actual investment performance. The historical returns are as follows:

Source: Historical EPF dividend rates

What else you should know

• Zakat implication: EPF does not conduct dividend purification for Simpanan Shariah; members may individually consult their State Islamic Religious Council for personal zakat guidance.
• Withdrawal, nomination, and employer contributions remain identical to the conventional account, except for i-Invest choices being limited to Shariah-compliant funds.
• Inheritance clarity: Simpanan Shariah ensures that savings—upon the member’s passing—are inherited without exposure to non-permissible investments.
• Switching is voluntary & irreversible: Once switched, your account remains under the Shariah portfolio.

How to switch

Members can opt in to Simpanan Shariah through the EPF i-Akaun mobile app or EPF counters. The switch is irreversible—once converted, members remain in the Shariah scheme permanently.

Steps via i-Akaun app:

1. Log in to the app.
2. Tap on Profile > Account Details.
3. Select Register for Simpanan Shariah.
4. Confirm the declaration and submit.

12. Physical assets: gold & property

Physical assets like gold and real estate have long been favoured by Muslims for their intrinsic value, tangible nature, and potential as a hedge against inflation. When structured correctly, both can align with Islamic finance principles.

Investing in gold

Gold is a real asset that holds intrinsic value and is widely recognised in Islam. Historically used as money (dinar), gold is permissible as long as riba (interest) and gharar (uncertainty) are avoided in the transaction.

How to invest in Shariah-compliant gold

There are three common ways to invest in gold Islamically in Malaysia:

• Physical gold bars and coins:
  - Offered by banks like Public Gold, Maybank Islamic, and CIMB Islamic.
  - Must involve spot transactions (payment and delivery at the same time).
  - Commonly available in denominations like 1g, 5g, 10g, 50g, and 100g.

• Shariah-compliant gold investment accounts:
  - Examples: KFH Gold Account-i, Public Gold GAP, HelloGold.
  - These platforms are structured to follow bai’ al-sarf (currency exchange) rules and are audited for compliance.
  

• Gold-backed ETFs and unit trust funds:
  - While less common locally, there are Shariah-compliant gold ETFs available globally that can be accessed via brokers offering global market access.
  

Investing in real estate/ property

Islam permits property ownership and rental income as long as the asset is acquired and managed in a Shariah-compliant manner. This includes:

• No interest-based financing (riba).
• No rental to businesses engaging in haram activities (e.g., alcohol, gambling).
• Proper contract structure (e.g., ijarah or musharakah mutanaqisah).

Malaysians looking to buy or invest in property can consider:

• Islamic home financing (e.g., Maybank Islamic’s Commodity Murabahah Home Financing-i, CIMB Islamic’s Flexi Home Financing-i).
  - Uses sale-based contracts, not interest.
  - Profits are pre-agreed and not based on fluctuating interest rates.

• REITs and fractional ownership:
  - As covered earlier, i-REITs listed on Bursa Malaysia allow investors to gain exposure to real estate with a small capital outlay.

• Direct ownership of halal commercial or residential properties.
  - Especially if rented to tenants with Shariah-compliant businesses (e.g., clinics, retail, F&B excluding alcohol and pork).

Zakat, purification & compliance hygiene in Islamic investing

Fulfilling religious obligations is fundamental to Islamic finance. Beyond growing wealth ethically, Muslim investors must ensure their wealth is purified and distributed responsibly in line with Shariah principles. Two core practices enable this: Zakat and Purification.

Zakat on investments

Zakat is a mandatory annual almsgiving—one of Islam’s five pillars. In the context of investing, it functions as a wealth purification mechanism and a tool for redistribution to those in need.

Standard rate: 2.5% annually on eligible assets.

• Nisab: Minimum threshold equivalent to 85g of gold. The value fluctuates daily; you can check it via official state zakat authorities such as PPZ-MAIWP.
• Haul: The wealth must be held for one full Islamic lunar year. If using the Gregorian calendar, a slightly adjusted rate of 2.5775% may be used.

Example:

If your Shariah-compliant investment portfolio is valued at RM50,000 (and above the nisab), your zakat would be:

RM50,000 × 2.5% = RM1,250

Notably, Lembaga Tabung Haji pays zakat on behalf of its depositors, so you do not need to calculate or pay zakat separately on your Tabung Haji savings.

Dividend and income purification

While Shariah-compliant funds screen investments rigorously, minor exposure to non-permissible income (e.g., conventional interest) can still occur. This is where purification comes in.

• What to purify: A small portion of dividends or gains, typically 1–5%, derived from non-compliant sources.
• What to do: Donate the "impure" portion to charity. You are not allowed to retain any benefit from this amount.

Example:

You receive RM200 in dividends from a fund. The fund manager’s report states a purification ratio of 0.85%.

RM200 × 0.85% = RM1.70 must be donated to a registered charity.

Many Shariah-compliant funds publish purification ratios in their annual or semi-annual reports. It’s good practice to document your purification payments for recordkeeping and audit purposes.

How to verify Shariah status (step-by-step)

For individual stocks on Bursa Malaysia

The only official source is the List of Shariah-Compliant Securities published by the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC). This list is reviewed and updated twice a year, in May and November.

To check:

1. Visit www.sc.com.my.
2. Navigate to the Islamic Capital Market section.
3. Look for the most recent Shariah-Compliant Securities List and download the PDF.
4. Search by the stock name or code to confirm status.

This list determines whether a listed stock is currently considered Shariah-compliant. Always refer to the latest version.

For unit trusts, ETFs, PRS, and REITs

You must review the fund’s Prospectus and Product Highlights Sheet (PHS). These regulatory documents will explicitly state whether the fund is Shariah-compliant.

What to look for:

• A clear label that it is a Shariah-compliant fund.
• A dedicated Shariah Adviser’s Report, which verifies that the fund adheres to Islamic principles in its operations and investment policy.

If the prospectus does not include a Shariah adviser or report, then the fund is not certified as Shariah-compliant, even if it claims to invest ethically.

For savings vehicles and digital investment platforms

In the case of institutions like Lembaga Tabung Haji, confirmation of their Shariah governance structure and compliance audits can be found directly on their official websites.

For digital platforms like StashAway, Shariah-compliant offerings are disclosed clearly under product names such as StashAway Shariah Global Portfolios. These products are built to track Shariah-compliant indices and are certified by recognised Shariah advisory firms.

Always ensure that the provider:

• Is licensed by the Securities Commission Malaysia (SC) or Bank Negara Malaysia (BNM).
• Publishes a Shariah Governance policy or similar document outlining its compliance.

A special note on ASNB funds

Amanah Saham Nasional Berhad (ASNB) offers both Shariah-compliant and conventional funds. It's essential to distinguish between them.

• Explicitly Shariah-Compliant
  : Funds such as ASN Equity Shariah, ASN Imbang (Mixed Asset) Shariah, and ASN Sukuk are fully Shariah-compliant and governed by a licensed Shariah adviser. These funds include the proper documentation and are regulated under SC’s Islamic investment framework.
• Permissible by Fatwa (Harus):
  Funds such as Amanah Saham Bumiputera (ASB) and other fixed-price funds are not Shariah-compliant by structure but are permitted for Muslim investors under fatwa rulings based on maslahah (public benefit). This classification is different from formal Shariah compliance.

Frequently asked questions (FAQs)

What is Islamic investment?

Islamic investment refers to the practice of allocating capital in a way that adheres to Shariah principles, including the prohibition of interest (riba), gambling (maysir), and uncertainty (gharar). It involves investing in halal (permissible) assets and excludes companies or funds involved in non-compliant sectors such as alcohol, conventional banking, and tobacco.

How does Malaysia’s Shariah screening work?

Malaysia follows a two-tier Shariah screening methodology developed by the Securities Commission (SC). It evaluates:

1. The nature of the company’s business activities.
2. The financial ratios — specifically thresholds on interest-based income and debt.

The official List of Shariah-Compliant Securities is published semi-annually by the SC.

Are REITs halal in Malaysia?

Yes, i-REITs (Islamic Real Estate Investment Trusts) are available in Malaysia. These REITs comply with Shariah by ensuring rental income comes from permissible activities and are subject to strict screening and Shariah audits. As of now, five i-REITs are listed on Bursa Malaysia.

Do I need to purify dividends? How?

Yes, for Shariah-compliant investments, dividend purification may be necessary if any portion of income is derived from non-halal sources. Investors are required to calculate the “impure” portion (based on the purification ratio provided in fund reports) and donate it to charity.

How is zakat on shares calculated?

Zakat is 2.5% of the market value of eligible investments held for one lunar year and exceeding the nisab threshold (equivalent to the value of 85g of gold). For portfolios, apply the 2.5% rate on the total value on your zakat due date.

Is Tabung Haji an investment?

Yes, Tabung Haji is both a savings platform and an investment vehicle. It invests depositors’ funds in Shariah-compliant instruments and distributes annual profits. Zakat is paid on behalf of depositors, and savings are guaranteed by the Malaysian government.

Which robo-advisors are Shariah-compliant?

Currently, StashAway offers a Shariah-compliant Global Portfolio, which is certified by an independent Shariah adviser.

Can I invest in sukuk as a retail investor in Malaysia?

Yes, retail investors can access Shariah-compliant sukuk via Islamic unit trust funds, PRS, robo-advisors like StashAway, or selected sukuk-focused ETFs available through international brokers. Malaysia doesn’t currently list retail sukuk on Bursa.

What is the difference between Shariah-compliant and fatwa-permissible investments?

Shariah-compliant investments are structured and certified according to Islamic finance principles and undergo formal screening. Fatwa-permissible funds, like ASB, are not structurally Shariah-compliant but are deemed permissible (harus) under special rulings for socio-economic reasons.

Is EPF Simpanan Shariah truly Shariah-compliant?

Yes. EPF Simpanan Shariah is fully compliant with Islamic investment principles. It is managed under a separate fund governed by a Shariah Advisory Panel. Dividends are based on actual investment returns, with no guaranteed minimum.

How do I know if a unit trust is halal?

A halal unit trust must have a Shariah Adviser’s Report in its prospectus and Product Highlights Sheet (PHS). You should verify this in the fund’s documentation and ensure it is listed as Shariah-compliant on the fund provider’s website or the SC database.

Are gold and property halal investments?

Yes, physical gold and real estate are inherently halal. However, transactions must follow Islamic rules, including full ownership, no speculative contracts, and transparent pricing. Many Islamic banks and fintech platforms offer Shariah-compliant gold savings and property investment financing.

Glossary

• AAOIFI – Global standard-setting body for Islamic finance, based in Bahrain.
• Bai’ al-Sarf – Islamic principle governing currency and gold exchange; requires immediate delivery and price certainty.
• DanaInfra – Malaysian government-owned company that issues sukuk to fund national infrastructure projects like MRT.
• Dividend purification – Cleansing of income derived from non-compliant sources by donating a portion to charity.
• ETBS – Exchange Traded Bonds and Sukuk; Bursa Malaysia’s platform for retail sukuk trading.
• Fatwa – A formal ruling or interpretation on Islamic law by a qualified scholar or council.
• Fiqh al-Muamalat – Islamic jurisprudence relating to commercial and financial transactions.
• Gharar – Prohibited excessive uncertainty or ambiguity in financial contracts.
• Halal – Permissible according to Islamic law.
• Hibah – Voluntary gift; often used by Islamic banks in place of interest in deposit accounts.
• Ijārah – Islamic leasing contract; asset is rented, not sold.
• i-ETF – Exchange-Traded Fund that invests only in Shariah-compliant securities.
• i-REIT – Real Estate Investment Trust that complies with Islamic principles.
• i-MMF – Islamic Money Market Fund; short-term, low-risk investment fund with halal assets.
• Khazanah Sukuk – Sovereign sukuk issued by Malaysia’s sovereign wealth fund, Khazanah Nasional.
• Maqāṣid al-Shariah – The five objectives of Islamic law: protection of faith, life, intellect, lineage, and property.
• Maslahah – Public interest; often used as a legal basis for permitting certain practices under fatwa.
• Maysir – Prohibited speculation or gambling in financial activities.
• Mudarabah – Profit-sharing contract where one party provides capital and the other manages the business.
• Murābaḥah – A cost-plus sale contract; used widely in Islamic financing.
• Mushārakah – Partnership where all parties contribute capital and share profits and losses.
• Nisab – The minimum wealth threshold before zakat becomes obligatory.
• PPZ-MAIWP – Federal Territory’s Zakat Collection Center; publishes nisab rates and zakat guides.
• PRS – Private Retirement Scheme; voluntary long-term savings scheme with Shariah options.
• Purification – Donating the non-halal portion of income from otherwise Shariah-compliant investments.
• Qard – Benevolent loan contract, often used in Islamic savings accounts.
• Riba – Prohibited interest or usury.
• SAC-SC – Shariah Advisory Council of the Securities Commission Malaysia; authority on halal investment rulings.
• Simpanan Shariah – Shariah-compliant retirement savings account under EPF.
• Sukuk – Islamic bonds that generate returns from asset-based profit rather than interest.
• Tabung Haji (TH) – Malaysia’s pilgrimage fund board; government-backed savings and investment institution for Muslims.
• Tawarruq – Commodity-based financing structure commonly used in Islamic personal and home financing.
• Wadiah – Custodianship or safekeeping contract; bank holds money in trust and may offer hibah.
• Wakālah – Agency contract where one party manages money or tasks on behalf of another.