What is Shariah-compliant investing?
This strategy draws on the expertise of Islamic scholars and other experts, and only invests in businesses that operate within the principles of the Islamic faith. This means excluding sectors such as tobacco, gambling and weapons. The approach works in the same way as an ethical fund, screening out investments that don’t align with Shariah principles.
The Aviva Shariah Investment Strategy is available to members in any of our workplace pensions.
The value of a pension can go down a well as up, so members could get back less than paid in.
What is the Aviva Shariah Investment Strategy?
The Aviva Shariah Investment Strategy is a multi-fund approach designed to help members prepare for their retirement in a way which is compliant with the Islamic Faith.
Achieving growth is the main aim of the growth stage of the strategy. Capital preservation then becomes more important as members get closer to retirement. This works for customers who want to keep their options open and decide later how to take their savings. We also offer both single drawdown and phased drawdown through our Self-Select drawdown option when a member chooses to start taking money from their pension.
We show the journey to retirement in the Aviva Shariah Investment Strategy below:
Journey to retirement in the Aviva Shariah Investment Strategy (accessible description)
This bar chart (also referred to as a glidepath) shows the percentage allocation of investments across three Shariah-compliant funds based on the number of years remaining until retirement.
- Shariah Long Term Growth Fund (dark blue): Starts with the highest allocation (100%) at 40+ years to retirement and gradually decreases to 0% 10 years before retirement.
- Shariah Growth Fund (pink): Begins with a moderate allocation (20%) 14 years before retirement and reaches 100% with 10 years remaining. Allocations then steadily reduce by 10% a year.
- Shariah Consolidation Fund (light blue): Gradually introduced 10 years before retirement. Members are fully invested in this fund at retirement.
The chart illustrates how risk is reduced in the strategy and how the focus shifts from growth-orientated funds to more stable, conservative investments as members get closer to retirement.
The three funds in the Aviva Shariah Investment Strategy invest in funds from HSBC’s well-established range of Shariah funds. These funds are:
HSBC Islamic Global Equity Index Fund 
HSBC Shariah Multi Asset Fund
HSBC Global Sukuk Bond Fund
How de-risking works
Until 15 years before retirement
We invest members’ pension savings in the Aviva Shariah Long Term Growth Fund, which is made up of developed and emerging market equities.
From 15 years before retirement
We gradually move members to the Aviva Shariah Growth Fund. Members’ savings remain invested in equities, but we gradually reduce the allocation. Diversification is achieved through investment in property, commodities and a small allocation to Sukuk.
From 10 years before retirement
We gradually move members into the Aviva Shariah Consolidation Fund or Target Drawdown Fund. We gradually reduce the allocation to company shares and invest in more defensive assets, namely Sukuk, as retirement gets closer.
Compliance with the Islamic faith
Independent review by Islamic scholars
An independent committee of Islamic scholars with experience in Islamic finance reviews the underlying funds in the Aviva Shariah Investment Strategy every year to make sure they remain compliant with the Islamic faith.
The HSBC Global Shariah Supervisory Committee carries out the reviews and issues an annual Shariah certificate to show the HSBC funds are compliant with Shariah principles.
Giving impure money to charity
The companies in the HSBC funds (the underlying funds in the Shariah Investment Strategy) are Shariah compliant. But it’s possible they might generate a small part of revenue from non-compliant industries.
If this happens, the HSBC Global Shariah Supervisory Committee calculates the amount and gives it to their nominated charity, which is currently the BBC’s Children in Need.
The donated money goes to local charities and projects focused on helping BAME/Muslim communities in the UK facing issues such as racism, poor English language skills, and lack of support for asylum seekers, refugees and migrants.
Aviva’s structured fund governance process
Like our other strategies, the Shariah Investment Strategy also falls under Aviva’s structured fund governance process.
We have a dedicated team whose role is to regularly review the funds that make up the Shariah Investment Strategy and to check they are performing as expected.
