Putting your Super where your heart is

Halal Super is increasing in popularity as millennials are setting a trend when it comes to having more say on what their super funds are investing in. This article explains what Halal investing is and how to take more control over how your Super is invested. Millennials – take a bow. Not only are you concerned about how your Super is invested, you are more likely than other age group to act on your beliefs when choosing a Super fund.

Research commissioned by the Responsible Investment Association Australasia (RIAA) reveals that 75% of Millennials prefer to invest in a responsible Super fund than one that only considers maximising financial returns. Well ahead of Gen X on 66% and Baby Boomers on 68%.

That’s a pretty strong trend which sends a clear message not only to superannuation and investment fund managers, but also to the wider corporate community – people care about more than just profits. They also want their investments to contribute to the greater good.

What makes your Super Halal?

It is important to identify a Halal Super fund to ensure that your Super and investments does not fund industries against your values. An investment is Halal when it invests in companies and industries that are operating in line with the Islamic principles of investing. There are many conventional investment products that are not Shariah Compliant, the most common ones are investments in alcohol, military, media and pig products. Additionally, the receiving of interest is strictly forbidden in Islam. If a positive, fixed, predetermined rate is attached to the maturity (i.e. a guaranteed rate regardless of the performance of the investment), it will be considered riba and therefore prohibited.

Unfortunately, most Superannuation funds invest on average 34% of your super in interest-bearing investments, while the remaining investments are conducted without any regard for Islamic investment principles. And over 1/3 of your Super may fund industries against your values. Given the wide range of considerations, you may need to do some in-depth research to find the fund or funds that best match your values.

Is your fund Shariah Compliant?

While you may have an ‘out of sight, out of mind’ attitude to your Super, it’s important to remember it’s your money and you get to choose where and how it’s invested. Start with your fund’s website or disclosure documents and look for their Shariah Compliance section. A Super fund that is certified to be Shariah Compliant is one that have been through reviews, audits and have been inspected by an independent panel of experts in Islamic ethics and law. The formal certificate of compliance ensures that a fund applies Shariah Compliant filters across their entire range of investments and transactions.

Advice moves with the times

Fortunately, it is becoming easier to track down the investment funds that suit you and your values. At Hejaz Financial Services, ensure that the highest standards of Sharia compliance are upheld by employing a 3-tier Sharia governance process to ensure the Sharia compliance of our services. Visit www.hejazfs.com.au to learn more about our Superannuation product or call 1300 043 529 to talk to us about the issues that are important to you so we can help you invest your Super where your heart is.