Shariah finance is big business. Just think of all that sheikh-managed SWF money washing around at the moment. Surely god-endorsed finance is the way forward. Alpha in this world and the next.
Perhaps it’s a sign of maturity in the market - now there’s a shariah-compliant hedge fund.
According to the New York Times, The Ryada Capital Investment Company, a Kuwaiti money manager, is prepping a $100 million Islamic hedge fund, hoping to take advantage of the growing demand for investment products that comply with Islamic law.
The basic issue with Islamic finance is that the Qu’ran prohibits the charging of interest - usury. Various institutions have come up with some clever ways to trick God - artificially generating ‘interest like’ returns without actually charging interest.
But an Islamic hedge fund opens up a whole new can of sin, surely. Rightly or wrongly, hedge funds are only just finding acceptance in the mainstream of Western finance - and even then, with reservations in some quarters.
What, we wonder, would God’s attitude to hedge funds be? Worse - shorting. If charging interest is haram, then shorting is thought by some to be up there with forsaking the big guy and coveting thy neighbours Ox - we’re talking the big ten no gos.
“We will do limited short selling … We have it there just in case we need it. Speculation happens, its human nature…” Ryada chief Jamal Al-Saeed told Reuters.
