In a first for an exchange traded fund (ETF) in South Africa, Absa Capital today announced that its NewGold ETF is Shari’ah compliant. The Shari’ah Supervisory Board, made up of specialised jurists in Shari’ah Islamic Law, issued a ruling stating that the NewGold ETF complies with Shari’ah. As such it is in line with Islamic principles of ethical investing.
The NewGold ETF, the only commodity based ETF in the local market, is a non-interest based product investing directly in gold bullion.
The issuing company, NewGold Issuer Pty (Ltd), was incorporated for the sole purpose of issuing securities backed by gold bullion, tracking the price of gold, and is not involved in any activities that are not permitted under Shari’ah Law.
Vladimir Nedeljkovic, head of ETFs and index products at Absa Capital said the certification has opened the way for Muslim investors to gain exposure to gold through investing in a listed ETF.
Today’s announcement follows hot on the heels of the news earlier this year that NewGold had become the country’s largest ETF when it dethroned the Satrix40 from the top spot.
“Absa Capital’s NewGold ETF is the largest ETF in South Africa with R6.4bn assets under management,” said Nedeljkovic. “Since the beginning of 2007 to date, its assets under management have increased more than four times.”
NewGold was designed to track the price of gold and create a liquid, listed investment tool that is fully backed by gold bullion.
Note to the editor:
About New Gold
NewGold was designed to track the price of gold and create an investment tool to allow institutional and retail investors to invest in a liquid, listed instrument that is fully backed by gold bullion. NewGold ETF, the only commodity ETF in the local market, was launched in November 2004 with assets under management of just under R250m
Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays Capital, is a leading South African investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.
Shari’ah Supervisory Board
Absa Islamic Bank appointed an independent Shari’ah Supervisory Board of specialised Jurists in Shari’ah Law. They are entrusted with the duty of directing, reviewing and supervising the activities of Absa Islamic Banking in order to ensure that they are in compliance with Islamic rules and principles. They are tasked to approve new products, monitor the implementation of the products and audit the Islamic banking operations. The independent Shari’ah Supervisory Board is the custodian of Shari’ah compliance and it ensures that the Absa Islamic Bank operates in terms of Shari’ah through regular audits and board meetings at least six times a year. Absa Islamic Banking is a member of the International Islamic standard – AAOIFI. The fat ā wa and rulings of the Shari’ah Supervisory Board are binding on Absa Islamic Banking