Other islamic finance principles:
Mudarabah:
- Profit and loss-sharing arrangement
- One party supplies funding, the other contributes effort and management expertise
Murabaha Financing:
- Non-profit and loss-sharing arrangement
- Involves a third party purchasing an item at a predefined markup
- Repayment occurs in installments, avoiding interest prohibited in Islamic finance
Shariah-Compliant Funds:
- Discouraging wealth concentration
- Viewing money as a means, not an end
- Promoting risk-sharing for equitable profit and risk distribution
Practical Application of Principles:
- Considering ethical aspects in investment portfolios
- Questioning a company's involvement in controversial practices
Key Tenets of Islamic Finance:
- Structured to filter out companies with unacceptable exposure
- Aligns with faith-based ethical and sustainable/ESG-focused investing
Challenges in Screening Processes:
- Difficulty in entirely eliminating exposure to companies with minimal ties to prohibited activities
