The Sharia guidelines are based on the rules determined by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), a global Islamic finance standards-setting body, governed by an international panel of highly respected Sharia scholars, and are as follows:

Asset classes

Only stocks and Islamic ETFs are eligible for Shariah-compliance consideration. Preferred shared are considered to be non-compliant.

Business activities screens

Companies are only to be considered compliant from a business perspective if the cumulative revenue from non-compliant activities and non-operating interest income does not exceed 5% of their total income. Non-compliant income sources include the following:

  • Alcohol
  • Gambling
  • Weapons
  • Tobacco
  • Adult Entertainment
  • Pork Products
  • Highly-leveraged Businesses
  • Interest-Based Businesses
  • Music, Cinema or Broadcasting

Financial screens

The following screens have to be fulfilled to ensure Sharia-compliance according to the defined rules:
  • Interest-bearing debt divided by 12-month average market capitalization should be less than 30%
  • Cash, cash equivalents and short-term investments divided by the 12-month average market capitalization should be less than 30%
  • Cash, cash equivalents and receivables divided by total assets should be less than 30%
  • Cumulative revenue from non-compliant activities and non-operating interest income should not exceed 5% of total income