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Meezan Wealth
ABN- 76 642 263 250 ACN-642 263 250
Corporate Authorised Representative (ASIC No. 1283123 of Lifespan Financial planning Pty Ltd (AFSL 229892)
Tax practitioner Board, Tax (Financial) Adviser registration number – 25294218
Super Simplifier Super & Pension (the Fund) is issued by Equity Trustees Superannuation Limited (ETSL).
ABN: 36 526 795 205
Unique superannuation
Identifier: 36 526 795 205 001
ABN- 30 642 725 639 ACN-642 725 639
Authorised Credit Representative (529817) of Kuone Pty Ltd T/As 360 MMS, Australian Credit Licence-504193)
Member of The Finance Brokers association of Australia Limited (FBAA) -M-348502
Meezan Invest Pty Ltd
ABN- 146 639 62105 ACN- 663 962 105
Corporate Authorized Representative (ASIC No.1283123 of Lifespan Financial planning Pty Ltd AFSL 229892)
Meezan Invest engages with IdealRatings who filter out any shares that are not shariah-compliant from the investment universe in accordance with their Shariah Rulebook and Methodology agreed to between IdealRatings Inc (IdealRatings) and ISRA International Consulting Sdn Bhd (ISRA Consulting). Lifespan then use the remaining investment universe to build the direct share component of the portfolios. IdealRatings will also review the holdings of any Exchange Traded Funds that we wish to use to ensure that they have enough of their portfolio invested in Sharia Compliant investments in accordance with the Shariah Rulebook and Methodology agreed to between IdealRatings and ISRA Consulting. Then, Meezan Invest, in conjunction with Lifespan Financial Planning acting as an asset consultant for Meezan Invest, selects investments from the remaining assets to build a portfolio that is predominantly made up of growth and alternative investments, including Australian and International shares, ETFs, property and infrastructure, alternatives and Gold. The portfolio will also have a small allocation to cash which will pay a small amount of interest. The interest on the cash is non-permissible and there will also be small amounts of income from the investment investments within the investment universe that are non-permissible. Periodically, we will go through a purification process where we, with the assistance of IdealRatings, determine how much non-permissible income has been generated by the portfolio and we will write to each investor to advise them of how much non-permissible income was generated to allow them to purify this income by making a donation to a charity of their choice. More information about the Shariah Rulebooks and Methodologies used including the purification process can be found below. The proposed assets to be included in the final portfolio will finally be certified as Shariah-Compliant by ISRA Consulting after they have reviewed the final investments that we select after IdealRatings’ screening process.
Due to your requirement for a Sharia compliant portfolio, Lifespan cannot allocate to traditional defensive asset classes such as fixed interest and cash over a certain amount. Therefore, we replaced these asset classes by a larger allocation to Gold, alternatives, other commodities, REITS and in some cases by having a higher allocation to shares than we would normally have in the portfolio. Lifespan view these assets as Growth assets which are riskier than fixed interest and as such your portfolio will carry a higher risk and experience higher volatility than a standard portfolio.
There are Sharia Compliant investments that are put forward as defensive that invest in Sharia Compliant arrangements which are unlisted, unrated and are generally private funding and profit share arrangements between unlisted and unrated businesses. Our view is that these investments are not defensive and carry significant risks which is why we choose not to use them and prefer more traditional growth investments instead even if the portfolios become more volatile.
Where possible, Lifespan will seek diversification of stocks and sectors. Our approach seeks to maximise risk adjusted returns for the portfolio such that the portfolio outperforms in the medium and long term. Lifespan will assess the economic cycle by using a range of macro and micro economic indicators but remains style neutral. We will also use both qualitative and quantitative inputs to understand the drivers and risks of market sentiment, especially in periods where valuations are at extreme levels. Our preference is for Mid and Large cap companies. Finally, considering all the above we will select the stocks to include in the portfolios.
IdealRatings Inc (IdealRatings) conducts screening on the Global Equities, real estate investments trusts (REITs) and selected exchange-traded funds (ETFs) in accordance with the Shariah Rulebook and Methodology agreed to between IdealRatings and ISRA International Consulting Sdn Bhd (ISRA Consulting). ISRA Consulting as its Shariah Adviser certifies and provides the Shariah Pronouncements of the investments for them to comply with the Shariah Rulebook.
In general, the Islamic Finance Methodology to screen Compliant Equities and REITs stipulates that Investments are not permitted in stock of a company, which belongs to any of the following industries, or whose operating revenue derived from the prohibited activities listed below (i.e. non-permissible income) which exceeds 5% of its cumulative total income.
There are four (4) key areas of screening for shariah compliance and they are:
(1) Business Screening.
(2) Financial Ratio screening.
(3) Non-Permissible Income screening.
(4) Preferred Shares.
Investment is prohibited in companies whose primary operation in non-permissible business activities including but not limited to:
In addition to the business activities screening, Islamic Finance requires the following financial screening of the listed companies:
Non-Permissible income – income derived from the non-permissible sources should not exceed 5%.
Preferred Shares – No investment in fixed income preferred shares is allowed.
A listed company’s business and financial position could change over time and such changes could affect both the shariah compliance of the company and relative “purification” percentage. These changes could reflect changes in financials as well as income.
ETF Screening Methodology:
The screening process will entail screening each constituent of the ETF Index, based on the Shariah guidelines/Rulebook adopted by the Asset Management Company, for its Equities Shariah Screening Rulebook. As such, the 1st step of the ETF screening process, IdealRatings will screen each constituent in the Index of the ETF. The result will be an Index Constituent pass/fail list.
In addition, the 2nd step of the screening process would be analyzing Index Constituent Fail List such that the total weight of non-compliant stocks within the index tracked by ETFs should not exceeds certain threshold (e.g. 33%) of the index weights.
Purification Process
The disposal of the prohibited income generated from the dividends distribution for non-compliant companies is a must and therefore, Purification for the ETFs is necessary.
Purification Methodology
IdealRatings, Inc. (IdealRatings) is responsible to ensure all securities provided to Lifespan are screened according to the AAOIFI Shariah Rulebook, as required by its client. Meanwhile, ISRA International Consulting Sdn. Bhd. (ISRA Consulting) is responsible to form an independent opinion, as to whether the Shariah screening process carried out by IdealRatings follows the AAOIFI Shariah Rulebook.
In respect of the meeting held on Tuesday 29th November 2022 between ISRA Consulting and IdealRatings, the following points have been discussed regarding the Lifespan purification methodology to be applied for the Equities, REITs, and ETFs:
| Asset Class | Company | Dividend | Quantity | Purification Ratio | Purification |
| Equity | Apple Inc | 1 | 10 | 3.31% | 0.331 |
| REITs | Goodman Property Trust | 5 | 10 | 0.46% | 0.23 |
| ETF | Ishares Biotechnology ETF | 3 | 10 | 0.5% | 0.15 |
Accordingly, the Equities, REITs, and ETF amount of purification would be the sum of purifications: 0.331+0.23+0.15=0.711
In the event Lifespan is doing quarterly Purification, once the one portfolio purification is calculated, the rest of the portfolio purification should be factored into the AuMs of the first portfolio calculated per quarter. As an example, if the portfolio size is 1000 AUD and the second portfolio size is 2000 AUD then the purification calculation for the second portfolio is: 0.711*2000/1000=1.422
| Investment Portfolio Name | Meezan Islamic Growth |
| Investment objective | Aims to maximise total returns over long term by investing in a diversified portfolio of majority growth assets. A cost-effective, Islamic Investment portfolio that targets an investment return of CPI plus 4.5%. |
| Typical investor | Meezan Islamic Growth Portfolio is suitable for investors who are seeking investments screened and certified as Shariah compliant. In addition, the investors are seeking long-term gains and are prepared to accept a higher level of market risk and volatility along the way. |
| Investment strategy and Sharia approach | IdealRatings conducts screening on the Global Equities, real investments trusts (REITs) and selected exchange-traded funds (ETFs) in accordance with the Shariah Rulebook and Methodology agreed to between IdealRatings and ISRA Consulting. ISRA Consulting as its Shariah Adviser certifies and provides the Shariah Pronouncements of the investments for them to comply with the Shariah Rulebook. Meezan Invest will then use the sharia compliant investment universe to build the portfolio which is made up of predominantly mid to large cap growth and alternative investments. Our approach seeks to maximise risk adjusted returns for the portfolio over the medium to long term.
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| Management fee (% p.a.) | 1.35%
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| Minimum initial investment | $5,000
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| Suggested investment timeframe | 6 years. |
