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White Paper:

Evaluating Investment Performance of Portfolio Managers

Professor of Banking and Finance 
Portland State University  
Portland, OR 97207-0751

Research Papers:

Investment in Stock Market: Halal Investing and Zakat on Stocks

Abstract:     

This paper examines how Muslim investors can invest in the contemporary stock market in a way fully compatible with the letter and spirit of divine Islamic law or shariah and how his or her investment is considered for zakat – a religious obligation to donate to the poor and needy a certain percentage of wealth. The paper discusses a qualitative screening process to identify stocks of companies that are engaged in business or activities permissible (halal) in Islam and a quantitative screening process utilizing financial ratio analysis to allow companies in permissible business to use a tolerable level of interest-bearing securities and associated interest income and expenses. Stocks of companies passing these tests are designated as shariah-compliant stocks and these stocks form the investment opportunity set for Muslim investors. The paper then discusses how to cleanse investment income from shariah-compliant stocks contaminated by income from impermissible (haram) sources and two opinions of Islamic jurists and shariah scholars regarding how to treat investment in stocks for zakat calculation........Download pdf

Zakat on Retirement and Pension Plans

Abstract:     

This paper compares and contrasts alternative pension plans in the market place and their status as zakatable wealth or property. These plans differ in terms of who is responsible for providing funds for pension benefit to the retirees upon retirement and who is responsible for bearing investment risk. Whether a pension plan is subject to zakat immediately or upon receipt at retirement depends on immediate accessibility to and ownership of the funds in the account. It makes no difference whether employer and/or the employee is (are) responsible for funding the plan and who bears the investment risk. There is consensus among Muslim jurists and shariah scholars that mandatory plans offered as a part of compensation and benefit package for a job are subject to zakat when money is received upon retirement and non-mandatory plans offered as replacement for or supplement to employer-sponsored plans with voluntary employee participation are subject to zakat in each year of employment...........Download pdf