Rokibul Islam

A rapidly growing Islamic financial services provider has launched an Islamic self-managed super fund (SMSF) solution for members of the Australian Muslim community who want to invest in property for their retirement in a way that is compatible with their faith.

Sydney-based Meezan Wealth Management Founding Director Rokibul Islam said the solution, which is called Al-Mustaqbal Islamic SMSF, had been well received by Islamic medical, and other professionals and he expected strong interest from skilled migrants and Islamic family members who wanted to pool funds in an SMFS to buy property.

Up until now Islamic Australians who want to save for their retirement in an Islamic compliant way could invest in Meezan’s Islamic superannuation fund which largely decide where their member’s money is invested in a Sharia compliant way. With an Islamic SMSF they now have an alternative.

Members of the Islamic community in Australia, which is approaching one million people, overwhelmingly preferred to invest in property over any other asset class because of its physical nature and history of steadily increasing value. However, borrowing money to buy property and paying interest was forbidden (riba) under Islamic finance (Sharia) principles, Mr Islam said.

With the Islamic SMSF structure this issue was overcome as Meezan Finance could provide funding which followed Islamic Musharaka principles. Money borrowed to buy the property, which was placed in an SMSF, was repaid as rent and dividends rather than interest.

The SMSF initiative follows Meezan’s launch of a low-cost digital investing solution for the wider Australian Muslim community last year as part of a holistic approach to Islamic wealth management that also includes providing access to Islamic pensions, financial advice and retirement and estate planning.

Mr Islam said the Islamic SMSF worked on a number of different levels. Firstly, because buying property in Australia, particularly in Sydney was expensive, many Australian Muslims struggled to come up with the needed 20% deposit.  Because a single SMSF can have up to six members, family and friends could pool their money to get a Sharia compliant loan and buy an investment property held in an SMSF which they jointly control. Using this approach, Muslim investors could develop a property portfolio for long-term capital growth,” he said.

Mr Islam added: “The amount people can borrow is not determined by their income but rather by the size of the regular employer compulsory and voluntary personal contributions to the SMSF fund. Rent from the property would be taxed at a flat 15% rather than higher personal income or company tax rates and when the property is eventually sold for a greatly increased price it will be tax free as it will be free of capital gains tax.

“It is a religious, ethical and tax efficient win-win-win solution for Australian Muslims that was not available before,” Mr Islam said.

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Rokibul Islam

A rapidly growing Islamic financial services provider has launched a low-cost digital investing solution to remove obstacles to ethical investing for the wider Islamic community in Australia.

Sydney-based Meezan Wealth Management said the solution, which is called Meezan Invest, would revolutionise the way Islamic Australians were able to invest and dramatically improve access to investment portfolios that have been certified as being Sharia-complaint.

Up until now Islamic investors have had to invest a minimum of as much as $50,000 to access an Islamically compliant investment portfolio, could be charged total of fees as much as 2.5% per annum and often had to wait a month or more for redemptions.

With Meezan Invest’s Islamic Growth model portfolio the minimum investment is only $5,000, fees are around half the amount of some competitors and an online investment account can be opened in as little as five minutes. Other investment portfolios will soon be added.

Meezan Wealth Management Founding Director Rokibul Islam said the Meezan Invest solution was established in response to demand from Australian Muslims who wanted a simple and easy-to-use way to grow their wealth via professional portfolio management, while staying true to their values.

“At the moment those with smaller lump sums are shut out from investing in Islamic compliant portfolios. And because putting money in interest generating accounts is forbidden for Muslims, they have limited options apart from just letting money sit there and be eroded by inflation.

“Our new solution is designed to open up investment opportunities to all Australian Muslims whether they have small or large amounts to invest and who believe they do not require personal financial advice.

“We know and understand what it means to be Muslim and living in Australia, and the challenges faced when it comes to growing your wealth Islamically. For decades Muslims have faced the tough choice of having to compromise their faith when dealing with financial institutions in Australia. That has now changed,” Mr Islam said.

The Meezan Islamic Growth model portfolio targets a return of CPI plus 4.5% p.a. from a portfolio of 10-30 Australian and international holdings predominantly made up of mid to large cap shares and alternative investments.

The portfolio is managed by Lifespan Financial Planning’s Investment Committee which has more than 80 years combined investment experience. Meezan engages IdealRatings to filter out any shares that are not Shariah compliant, such as those from companies involved with adult entertainment, alcohol production and sales, cinema, conventional financial services, defence, gambling, tobacco and pork.

The Meezan Invest solution is underpinned by Melbourne-based investment platform, OpenInvest. The company’s head of distribution, Ravi Verma, said that OpenInvest was proud to be partnering with a firm like Meezan that was widely respected in its community. Meezan Wealth also offers Islamic superannuation and home finance solutions.

“We believe all Australians deserve access to the benefits of professional investing and are excited that this is now being made available to Australian Muslims in a way that is consistent with their religious principles,” Mr Verma said.

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