How to Invest in Sharia-Compliant Investment Products in the UAE

Monday 18 Sep 2023

The demand for Sharia-compliant investment products is growing in the UAE.



According to the global Islamic Funds Market, the growth in the sharia-compliant investment products has increased more than 300% over the last decade.

This article explores key questions investors ask along with understanding how to invest in Sharia-compliant investment products.

What are Sharia-compliant investment products?

Sharia refers to legal rules and regulations that are set in accordance with Islam. Sharia-compliant investment products are investment opportunities that are considered as halal as the investments comply with the Islamic law.

For an investment to be considered as Sharia-compliant, the company shouldn’t be involved in any of the following activities such as:

  • Cigarettes
  • Hard Drugs
  • Alcohol
  • Pork products
  • Gambling
  • Adult industry
  • Interest-lending institutions


How do Sharia-compliant investment products work?

Sharia-compliant investment products rely on a framework of profit sharing instead of interest earning. This is a crucial element in distinguishing between conventional investment and Sharia-compliant investment products. The design of the investments promotes equitable fairness along with risk sharing and social responsibility.


Before you invest in sharia-compliant products in UAE, ensure they comply with the following such as:

  • No interest is charged or earned on any of the investment products.
  • The investments don’t involve speculative transactions that are deemed as haram.
  • Ensure all the stakeholders are equally responsible for any risks undertaken along with shared profits.
  • The investment involves a tangible and identifiable asset.


Where can I invest in Sharia-compliant investment products in the UAE?

Sharia-compliant investment products for UAE residents are readily available from banks. Dubai Islamic Bank (DIB) has an assortment of investment options that cater to both the individual and corporations. Some banks even design investment plans based on your risk appetite like the First Abu Dhabi Bank. From the cautious investor to the very aggressive investor, all are accommodated.


Some of the sharia-compliant investment products you may be interested in are:

  • Sukuk – which are Islamic bonds that provide a fixed stream of income based on returns from profit-sharing or rental income.
  • Islamic mutual funds – that offer a portfolio of diverse investments from stocks, bonds and other securities, managed by professional investment managers.
  • Real estate investment trusts (REITs) – you get a share of the rental income from niche real estate properties.
  • Islamic ETFs – these exchange-traded funds involve an index of Sharia-compliant stocks that pay dividends.


What are the risks of investing in Sharia-compliant investment products?

While the benefits of Sharia-compliant investment products in UAE outweigh the risks, as investors, you should be aware of the cons. Many investments are touted as Sharia-compliant, but it could be just one part of the company's practices in halal business practices and products. Due diligence is an important factor to ensure you invest in a company that conducts halal business in all their ventures.


Sharia-compliant investment products are the best ways to invest halal money in investments that align with the Islamic beliefs. Not only do you see your money grow, but you are assured that the money you earn is halal. Before investing in any Sharia-compliant investment product, however, it is vital you do your research. This ensures your hard-earned money goes to the right investment platform.

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