ALFALAH GHP ISLAMIC FUND

Profile

The Alfalah Islamic Fund is the first Shariah Compliant fund launched by AGIM. AGIF is an open-ended fund that offers its investors an opportunity to invest in a diversified portfolio of Shariah Compliant investments with the objective of maximizing medium to long term returns for a given level of risk.

The Fund seeks to achieve its investment objective by investing funds in Shariah Compliant securities listed on the Stock Exchanges in Pakistan and abroad, Islamic Funds overseas and other Fixed Income Islamic instruments like Morabaha / Musharika Certificates & Sukuk Bonds.

The key benefits of investing in AGIF are as follows:

  • Avoidance of interest and other un-Islamic income/investment;

  • It is an asset allocation fund. The strategy of the Fund would be to actively manage the allocations to provide consistent returns to the investors;

  • Alfalah GHP already has a track record of successfully managing an asset allocation fund;

  • Tax free investment under Government regulations.

Investment Objectives

Alfalah GHP Islamic Fund is an open end asset allocation scheme with the primary objective of seeking long term capital appreciation and income from a diversified portfolio developed in consistence with the principles of Shariah. The investments in the Fund will be diversified both in terms of securities within an asset class as well as across asset classes. The Fund can invest upto a maximum of 80% in either Shariah complaint equity securities or alternatively the Fund can invest upto a maximum of 80% in Shariah compliant Income / money market instruments. The Fund will seek to actively switch between these asset classes so as to optimize investor returns over a period of time.

The Fund is designed to provide investment alternatives that are consistent with Islamic principles. All activities of the Fund shall be undertaken in accordance with the Islamic Shariah as per the guidelines given by Shariah Advisory Board of the Fund. The Fund shall not invest in any instrument or investment that is not compliant with Shariah rules and principles.

Investment Policy

The Investment would comprise of diversified Portfolio of Shariah-Compliant securities including Shariah-Compliant securities available outside Pakistan. The allocation between various investment classes will depend on prevailing market conditions and opportunities and will primarily comprise the following asset classes:

Shariah Advisory Board

The Shariah Board of the Fund consists of eminent Islamic economic and financial scholars. The Shariah Advisors have considerable experience in the field of Islamic Studies. The first Shariah Board of the Fund will be comprised of:

a) Mr. Khalil Ahmed Aazami ; and

b) Dr. Ejaz Ahmed Samadani.

The appointment of Shariah Advisors has been approved by the SECP vide its letter No. NBFC-II/AD/AGIML/157/2007, dated February 23, 2007.

Profile of Shariah Advisory Board

Mr. Khalil Ahmed Aazami

Mr. Khalil Ahmed Aazami is an Islamic Scholar having considerable experience in advising financial institutions on Shariah related affairs. Currently, Mr. Khalil Ahmed Aazami is a Shariah Advisor of Bank Alfalah – Islamic Banking and a member of Shariah Board Takaful Pakistan Limited. In addition to this, he is teaching at Dar-ul-Uloom Karachi and Centre of Islamic Economics.

Mr. Aazami has strong academic background in Islamic Studies and Islamic Economics. He has completed Takhassus Fil Ifta and Shahadah Alimiyyah from Dar-ul-Uloom Karachi, a renowned Islamic Institute of Pakistan. He is a faculty member of Centre of Islamic Economics, Karachi & Professional Institute of Excellence.

Dr. Ejaz Ahmed Samdani

Dr. Ejaz Ahmed Samdani is an eminent Islamic economic scholar, and has considerable experience in relevant field. He has completed his Ph.D/M. Phil from Karachi University (Department of Quran & Sunnah, Faculty of Islamic Studies) in the year 2005. Dr. Samdani has delivered many lectures about Islamic Banking and Takaful in Bahria University, Centre for Islamic Economics (CIE), Professional Institute of Excellence (PIE), Skill Development Council and other places. He has worked as Audit member of Center for Islamic Economics for different Islamic Banking Branches according to Shariah perspective. Dr. Samdani has issued about two thousand fatawas on different Islamic topics especially in Islamic Finance and Meeras.

Dr. Samdani was associated with Habib Bank Ltd. (Islamic Banking Division) as a Shariah Advisor from December 2004 to November 2006.

Dr. Samdani has strong academic background in Islamic Studies and Islamic Economics. He has completed “Al-T’khassus fi al Iftaa” from Jamia Darul Uloom, “Shahdat ul Alimiyah fi al-Uloom al Islamiyah wa al-Arabia” 8 years Alimiyah course and M. A in Islamic Studies from Bahauddin Zakariya University, Multan. He has written many books on different Shariah matters and his several research topics were published in various well renowned newspapers and magazines.

Shariah Investment Guidelines

All activities of the Fund shall be undertaken in accordance with the Islamic Shariah as per the guidelines given by Shariah Advisory Board of the Fund. The Fund shall not invest in any instrument or investment that is not compliant with Shariah rules and principles.

Alfalah GHP Islamic Fund plans to use the following criteria to ensure that their stock selection adheres to Shariah investment guidelines:

  1. Business of the Investee company (Sector Restriction)
    The basic business of the investee company should be Halal. Accordingly, investment in shares of conventional banks, insurance companies, leasing companies, companies dealing in alcohol, tobacco, pornography, etc. are not permissible.

  2. Financial Ratios (Financial Restriction)

    Total Debt to Total Assets
    The total debt of the Investee Company should not exceed 45% of the total assets

    lliquid to Total Assets
    The total illiquid assets of the Investee Company as a percentage of the total assets should be at least 10%.

    Investment in Shariah non-compliant activities and income from Shariah non-compliant investments.
    The following two conditions will be observed for screening purposes:

    .i. The total investment of the Investee Company in Shariah non- compliant business should not exceed 33% of its total assets.

    .ii. The income from Shariah non-compliant investment should not exceed 5% of the gross revenue of the Investee Company. (Gross revenue means net sales plus other income).

    Net liquid Assets vs. Share Price
    The net liquid assets (Total assets – (Tangible Fixed Assets + Inventory) - current liabilities) per share be less than the market price per share.

Characteristics of Units

Minimum Investment

PKR 5,000

Subsequent

PKR 1,000

Front-end Load

2. 50%

Back-end Load

0.00%

Management fee

The current level of management fees is 2.25% (two hundred and twenty five basis points) per annum of the average daily Net Assets Value of AGIF

Payment for Purchase of Units

Payment for the Fund Units can be made in the form of:

  1. Cheque (marked “Account Payee Only” in favor of “CDC-Trustee Alfalah GHP Islamic Fund”);

  2. Demand draft or Pay-order in favor of “CDC-Trustee Alfalah GHP Islamic Fund”;

  3. Online transfer of money.

Payment for Redemption of Units

Payment of the redemption proceeds will be made by a cross cheque, in favor of Unit Holder’s registered name, and will be sent to registered address of the Unit Holder within six (6) Business Days of the receipt of a properly documented request for redemption of Units

Distribution Policy

The net amount available for distribution at the end of the financial year (or such interim period as may be decided by the Management Company), shall comprise of the revenues earned by the Fund including the net impact of the revenue collected and paid out in the NAV calculation through Purchase (Offer) and Redemption (Repurchase) of Units, less all expenses incurred or accrued attributable to the Fund.

The Fund may distribute 90% of the amount available for distribution or any other payout ratio as bonus Units or cash dividends in order to avail tax exemption or any other benefits in the interest of the Unit Holder

Disclaimer

Prices of Units of the Fund and income from them may go up or down.

Under exceptional (extraordinary) circumstances, the Management Company may declare suspension of redemptions, invoke a queue system or announce winding-up. In such events the investor will probably have to wait for payment beyond the normal period and the redemption amount so determined may be lower than the price at the time the redemption request is lodged. Investors are advised to read the relevant clauses of the Fund’s Trust Deed for more detailed information regarding this clause.

The Units of the Trust are not bank deposits and are neither issued by, insured by, obligations of, nor otherwise supported by the SECP, any Government agency, the Trustee (except to the extent specifically stated in this document and the Trust Deed) or any of the shareholders of the Management Company or any of the Core Investors or any other bank or financial institution.

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