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For Investors

Key Shariah Structures

Amiri Capital is a pioneer in the Shariah complaint equity space having developed two key innovations:

1. Amiri S³– Shariah Stock Screening

The Process

• Amiri Capital has derived a complete Shariah taxonomy of all business activities companies can engage in, making it possible to semi-automatically process data feeds from financial data providers.
• Amiri Capital utilises data feeds where financial data items are already standardised (e.g. Worldscope) to enable meaningful comparison of ratios between different companies.
• Given the complexities of business compliance screening a sizeable proportion of companies cannot be screened from the algorithm; these companies are subject to manual analysis.
• Amiri Capital has developed a “Testing and Analysis” process that checks the integrity of financial databases, the results of the screens as well as the accuracy of the manual screening process.

2. “Islamic Shorting”

Amiri Capital was the first company to replicate the economic effects of shorting using a Wa’ad Structure, as utilised within AEAS. Amiri Capital’s Wa’ad structure allows clients to leverage both long and short investment opportunities thereby enhancing and smoothing returns regardless of market conditions. This major advance in Islamic finance not only allows investors to benefit from situations where companies are believed to be overvalued, but is an essential tool in risk management for equity investors.

Details of the Wa’ad based “Islamic Shorting” Structure:

The starting point of the Wa’ad structure is two parties entering into two legally distinct and binding unilateral promises (Wa’ad). On the closing of the promises a physical stock transaction between the two parties occurs.

Importantly the Wa’ad structure is applied at the individual stock level meaning that only stocks that have passed the Amiri S³ stock screens can be traded.

The Wa’ad based “Islamic Shorting” structure has been approved by many world-renowned Islamic finance scholars and has been awarded a Fatwa. It is implemented by Newedge Bank.

Benefits of being able to take short positions