The UAE has established itself as a major international financial centre by skillfully juggling conventional and Islamic finance. Although Sharia-compliant investing has existed for many years, it is currently playing a significant role in influencing market trends, providing reliable returns, and supporting the region’s sustainability movement.
Even with its increasing popularity, a lot of investors still think it’s complicated or restrictive. Some people think it only matters to Muslim investors, while others think its performance is inferior to that of traditional markets.
The truth is different. Asset-backed strategies have flourished in industries like real estate, logistics, healthcare, and technology, which have experienced significant growth under Sharia principles and are therefore appealing to a far wider range of investors.
Sharia finance focuses on structure rather than limitations. Since global markets are dealing with uncertainty, the emphasis on openness, moral investing, and risk sharing makes it particularly pertinent today.
Competitive Asset Class
The idea that Sharia finance is a conservative, sluggish industry is out of date. These days, sharia-compliant investments are dynamic and span a variety of asset classes, including exchange-traded funds, stocks, sukuk, and real estate investment trusts.
Their competitiveness is more significant. In the last ten years, Sharia-compliant stocks in the United Arab Emirates (UAE) have produced returns that are on par with, and occasionally better than, those of traditional indices.
The Sharia Index of the Dubai Financial Market (DFM) is one example. During financial downturns, it has outperformed general market trends by avoiding highly leveraged companies, providing investors with a degree of protection against crises that frequently result from excessive debt.
The Islamic bond substitute known as sukuk has also gained popularity, offering yields comparable to those of conventional bonds while taking advantage of the UAE’s sound economic policies and state-sponsored infrastructure initiatives. Because they are asset-backed, Sukuk are protected from the increase in interest rates that can affect traditional bonds.
Expats And Sharia Investments
The idea that Islamic finance is only available to Muslim investors is among the most pervasive misconceptions about it. Nothing could be further from the truth than that. Anyone searching for moral, interest-free financial products can make sharia-compliant investments, and the United Arab Emirates, which is home to one of the biggest expat communities worldwide, provides a flourishing environment for these kinds of opportunities.
A wide variety of Sharia-compliant investment options are available to foreigners living in the United Arab Emirates, such as equity portfolios, real estate funds, and exchange-traded funds (ETFs) listed on prominent exchanges such as DFM and Nasdaq Dubai.
In contrast to certain nations where nationality or residency status restricts access to Islamic financial products, the regulatory framework in the UAE facilitates seamless participation. Additionally, investors can confirm compliance by using financial apps that search for compliant stocks, investing in mutual funds that adhere to Sharia law, or seeking certification from reputable Sharia boards.