US fund manager Franklin Templeton launches its first Sharia fund focused on tech

Dubai: Mix Sharia-linked investments with high-tech? The US fund manager Franklin Templeton believes it can, launching its first Sharia-based technology fund. Holdings for the newly launched fund will become public next month, and will spread tech businesses in AI and ‘new commerce, as well as digital media transformation and the metaverse.

Fintech and digital payment entities will also be part of the fund’s coverage. “Companies must initially pass a business activities screen and an interest income screen, which limits income from prohibited activities to 5 per cent or less,” said Jonathan Curtis, Lead Portfolio Manager for the Franklin Shariah Technology Fund.

In the tech space, the Sharia-prohibited activities include the production/distribution of music, the production/distribution/screening of movies and television shows, defense and weapons manufacturers, and owning/operating casino and gaming facilities. Even with these off-limit activities, “Our investment universe consists of approximately 1,000 technology-related listed securities across the market capitalization spectrum,” said Curtis.

“We anticipate that the fund’s largest exposure will be within the large cap segment of the market followed by the mid-cap segment. By investing across the spectrum, we aim to provide investors access to a diverse range of companies across technology and related sectors with compelling long-term growth prospects.”

The investment space thus includes:

Of keen interest

Co-mingling the Sharia and technology investment space is still relatively untested waters. The Dubai-based fund manager Shuaa Capital has a portfolio of Sharia-compliant funds and also has extensive interests in the tech space, most notably its interest in the music streaming portal Anghami, which completed a listing on Nasdaq New York.

Franklin Templeton has over $3 billion in assets in its Shariah lines, which is led from its office in Dubai International Financial Centre. In addition, the firm offers dedicated Shariah investing expertise in Singapore and Malaysia.

“The screening criteria focus on prohibited business activities and applicable financial ratio tests,” said Singh.