• Profit to its unit holders relevant to the risk return of the fund, whilst staying true to Shariah principles;
• An investment with a stable unit price, for investment terms of 36 months or longer; and
• Income to investors across a range of major international currencies, with non-Australian dollar investments hedged against movements in the Australian dollar.
  

Assets of the Fund

Across a range of asset classes, all investments are in accordance with the Shariah investment guidelines, and generally precludes investments in businesses such as alcohol, pornography and gambling, and investments in interest bearing debt obligations or businesses that derive interest income.
Investment parameters of the Shariah Fund include:

• Direct property;
• Property development and onsale;
• Other managed funds;
• Joint ventures; and
• Compliant business investment

Who Can Invest?

The fund is open to investment by Indonesian nationals, Australian, and other non-Australian resident investors.

Strong Fund Management

Since its incorporation eleven years ago, LM has strategically grown all aspects of its business to uphold the underlying strength of its investment funds, whilst delivering those funds to market with a genuine service ethos for intermediaries and investors.

The success of LM and its funds is directly attributable to:

• Adopting a hands on, direct approach to the selection and ongoing management of fund assets;
• Proper and thorough due diligence for asset selection;
• Having an investment team with a broad base of experience and expertise which relates directly to the assets of the fund, leading to a qualified and informed understanding of those assets;
• Utilising a collaborative team approach for the selection and ongoing management of the assets of the fund;
• Having structured investment policies and lending criteria;
• Adopting a long term vision for the fund;
• Utilising effective portfolio management;
• A diversified distribution strategy through licensed financial advisers and intermediaries only, and not directly to retail investors. This means the product is selected as part of a long term, planned investment portfolio; and
  
• Transparency. LM holds regular research forums for the benefit of finance professionals who wish to undertake research for a comprehensive understanding of the fund, its investment policies, and LM’s management style prior to recommending investment.

Shariah Finance: Background Info

The emergence of Shariah Banking makes it possible for Muslims to bank in accordance with their values.

The Islamic banking industry today stands at several hundred billion dollars (estimates vary), and consists of more than 300 financial institutions in and outside the Muslim world. It is the product of the collective effort of bankers, economists, and Islamic legal scholars over the past several decades to develop financial solutions that meet the religious requirements of Muslims.

It is a young industry and a growth industry, and continues to evolve and expand both financially and geographically. It is indigenous and community-focused: it caters to devout Muslims in indigenous Muslim societies as well as in Muslim minorities of non-Muslim countries. Furthermore, it is an inclusive paradigm: non-Muslim individuals and communities that seek ethical financial solutions have also been attracted to Islamic banking.

The first modern Islamic financial institutions emerged in the 1960s and 1970s. Since then, Islamic banking has spread to a large number of Muslim countries, including the GCC and the Arab world at large, South and Southeast Asia, and even Muslim communities in the West. Bahrain is considered a hub for Islamic banking, with significant activity also taking place in Kuala Lumpur and London. Islamic financial institutions have taken the form of commercial banks, investment banks, investment and finance companies, insurance companies, and financial service companies. They follow different banking models: private institutions in a conventional economy (as in the GCC and the West), attempts at national Islamic banking systems (as in Sudan, Iran and Pakistan), and dual banking models (as in Malaysia). They also take different forms: wholly Islamic institutions, Islamic subsidiaries of conventional banking groups, and Islamic banking windows within conventional banks.

This is an industry that is still evolving, developing and growing. It has gone from commercial banking to syndicated transactions and equities, and more recently, into debt issuance and structured products. Its sophistication and product offering have developed along with this change. At an earlier stage, industry growth was in part a reflection of economic growth in the Islamic world, fuelled primarily by oil wealth. This created a growing middle-wealth segment and hence made banking a necessary service to the larger segment of the population. In the past several years, increased awareness about Islamic banking has led to conversion from conventional banking and continued high growth (15-20% in key markets).

In Indonesia, the growth of Shariah banking has been phenomenal with a consistent above 48% asset growth annually since 2001 (since 2003, the growth rate has been above 94%). In 1997, the country had only one Shariah commercial bank. As of June 2005, there are now 3 Shariah banks and 20 Shariah Banking Units (these are conventional banks which have been granted Shariah banking licenses). This is expected to continue and to accelerate in the future as existing Shariah banks are expanding both their branch networks and their balance sheet.

Islamic banking is an ethical and equitable mode of financial services that derives its principles from the Shariah (Islamic law). The Shariah is based on the Quran and the sunnah of the Prophet Muhammad (Peace be upon him), and it governs all aspects of personal and collective life. The most distinctive element of Shariah banking is the prohibition of interest, whether "nominal" or "excessive," simple or compound, fixed or floating. Other elements include the emphasis on equitable contracts, the linking of finance to productivity, the desirability of profit sharing, and the prohibition of gambling and certain types of uncertainty. These parameters define the nature and scope of Islamic banking, as interpreted by the Shariah scholars that work with Islamic financial institutions.

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