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Whatever your investing goals are, we are here to help you. Go through the sections given below to get basic, easy-to-understand information about various investment related topics.
Learn about investing and how it can help your money grow
The world of finance can be complicated and quite intimidating at times. We believe investments, as a practice is inherently simple once you understand the basics of investments and the terms associated with them. While you contemplate or plan your investments, please understand that investing is not about making quick money. Achieving your long-term financial goals requires sound planning. Every investment you make will have risks and rewards. These two factors will always go hand in hand. To learn more, read through the sections that interest you.

Basics of Investing
What is investing? Why bother investing? Understanding your needs

Financial Concepts
The Risk/Return Tradeoff Diversification Rupee Cost Averaging Asset Allocation

Mutual Fund Basics

What is a mutual fund? Benefits of investing in mutual funds Types of mutual funds Does investing in mutual funds mean investing in stocks?

Shariah-compliant Investments
What is a Shariah-compliant investment? What is an Islamic Investment Fund? What is a Shariah Advisory Board?

Basics of Investing

We believe that investing can be fairly simple, once you understand some of the most important concepts. In this section we endeavor to educate current and potential investors on the practice of investing from the ground up.
What is investing? What investing is not Why bother investing? Understanding your needs Types of investments

What is investing?
Its actually pretty simple: investing means putting your money to work for youactually, its a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And so thats what most of us do. But theres a limit to how much we can work and how much money we make out of it not to mention the fact that having a bunch of money is no fun if we dont have the leisure time to enjoy it. So, since you cannot create a duplicate of yourself to increase your working time, you need to send an extension of yourselfyour moneyto work. That way, while you are putting in hours for your employer, sleeping, reading the paper, or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime, or look for a higher paying job. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, real estate, gold etc. The point is that no matter the method you choose to invest, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, its the most important concept for you to understand.

What investing is not

Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a hot tip you heard from your colleague is essentially the same as placing a bet. A real investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping luck is on your side.

Develop portfolio strategy

Based on your objectives, their investment horizon and your risk profile, we will help you identify an ideal asset allocation strategy for each of your goals. This means, for each of your goal to be achieved in what types of asset classes you should invest in. Generally, the longer the time you have to achieve a certain objective, you can invest a larger portion of your money in considerably riskier investments. Similarly, the less time you have to achieve your objectives, the less proportion of your money shall be invested in risky assets.

Why bother investing?

Obviously, to earn more money. However, investing is becoming less of an extra thing to do and more of a necessity. For the average person, investing is the only way they can retire and yet maintain their present standard of living. By planning ahead you can ensure financial stability during your retirement.

Understanding your needs

Even though all investors are trying to make money, they all come from diverse backgrounds and have different needs. Therefore different types of investment solutions and methods are suitable for different types of investors. Although there are many factors that determine which path is optimal for an investor, we will look at three main categories: investment objectives, timeframe, and your personality. Investment objectives Generally speaking, investors have a few primary objectives: safety of capital, current income, or capital appreciation. These objectives depend on a persons age, stage/position in life, and personal circumstances. A 65-year-old widow living off her retirement savings is far more interested in preserving the value of investments than a 33-year-old business executive would be. Because the widow needs income from her investments to survive, she cannot risk losing her investment. The young executive, on the other hand, has time on his or her side and can therefore risk losing his money simply because he has time to make more money An investors financial position will also affect his or her objectives. A multi -millionaire is obviously going to have very different goals compared to a newly married couple just starting out. Timeframe As a general rule, the shorter your time horizon, the more conservative you should be. If your investment is for a long-term objective like retirement planning and you are still in your 20s, then you still have time to make up for losses and can therefore invest in aggressive investment vehicles like stocks. At the same time, if you start when you are young, you have the power of compounding on your side.

On the other hand, if you are about to retire, then the opportunity to recover losses on your investments is limited and therefore it is critical to invest your assets conservatively. Your personality When investing, you need to know how much volatility you can stand to see in your investments. Figuring this out is difficult; but there is some truth to an old investing maxim: youve taken on too much risk when you cant sleep at night because you are worrying about your investments. This is an indicator of your investment personality. Putting it all together: your risk tolerance By now it is probably clear to you that the main thing determining what works best for an investor is his or her capacity to take on risk. The core factors that define your risk tolerance are: > Investment Objectives > Timeframe > Your personality

Types of investments
Bonds Grouped under the general category called fixed-income securities, the term bond is commonly used to refer to any form of investment founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out. The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed (or risk-free in investing terminology). The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities. Stocks When you purchase stocks (or equities), you become a part owner of the business. This entitles you to vote at the shareholders meeting and allows you to receive any profits that the company allocates to its ownersthese profits are referred to as dividends. While bonds provide a steady stream of income, stocks are volatile. That is, they fluctuate in value on a daily basis. When you buy a stock, you are not guaranteed anything. Many stocks dont even pay dividends, making you any money only by increasing in value and going up in prices which might not happen. Compared to bonds, stocks provide relatively high potential returns. Of course, there is a price for this potential: you must assume the risk of losing some or all of your investment.

Mutual Funds A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which in turn enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: stocks, bonds, debt, stocks and bonds, gold, and the list goes on. The primary advantage of a mutual fund is that you can invest your money without needing the time or the experience in choosing investments.

Financial Concepts
In this section we will go through some of the key financial concepts that you must be aware of before investing. We will discuss concepts, like risk return tradeoff, rupee cost averaging and diversification, that are especially useful for individual investors.
The Risk Return Tradeoff Diversification Rupee Cost Averaging Asset Allocation

The Risk Return Tradeoff

Deciding what amount of risk you can take while remaining comfortable with your investments is very important. In the investing world, the dictionary definition of risk is the chance that an investments actual return will be different than expected. Technically, this is measured in statistics by standard deviation. Practically, risk means you have the possibility of losing some or even all of your original investment. Low risks are associated with low potential returns. High risks are associated with high potential returns. The risk return tradeoff is an effort to achieve a balance between the desire for the lowest possible risk and the highest possible return. A common misconception is that higher risk equals greater return. The risk return tradeoff tells us that the higher risk gives us the possibility of higher returns. There are no guarantees. Just as risk means higher potential returns, it also means higher potential losses. How do you know what risk level is most appropriate for you? This isnt an easy question to answer. Risk tolerance differs from person to person. It depends on goals, income, personal situation, etc. Hence, an individual investor needs to arrive at his own individual risk return tradeoff based on his investment objectives, his life-stage and his risk appetite.

Diversification
Diversification is a risk-management technique that mixes a wide variety of investments within a portfolio in order to minimize the impact that any one security will have on the overall performance of the portfolio. Diversification essentially lowers the risk of your portfolio. There are three main practices that can help you ensure the best diversification: Spread your portfolio among multiple investment vehicles such as cash, stocks, bonds, mutual funds, and perhaps even some real estate. Alternately you could invest only in mutual funds but of varied types. For example you could invest 30 per cent in equity schemes, 40 per cent in debt/income schemes and 30 per cent in money market schemes. Vary the risk in your securities. If you are investing in equity funds, then consider different types of equity funds. And if you are investing in income funds, you could consider both long-term and short-term funds. It would be wise to pick investments with varied risk levels; this will ensure that large losses are offset by other areas. Vary your securities by industry. This will minimize the impact of specific risks of certain industries. Diversification is the most important component in helping you reach your long-range financial goals while minimizing your risk. At the same time, diversification is not a foolproof guarantee against loss. No matter how much diversification you employ, investing involves taking on some sort of risk.

Rupee Cost Averaging

If you ask any professional investor what their hardest task is, he or she will tell you that it is timing the market. Trying to time the market is a very tricky strategy. Buying at the absolute low and selling at the peak is nearly impossible in practice. This is why investment professionals preach Rupee Cost Averaging. Rupee Cost Averaging is the process of buying fixed amounts into a security/stock/mutual fund at fixed points in time regardless of the prevailing price. This means you buy more units of the security at lower prices, and fewer units at higher prices. The cost per unit/share over time therefore averages out. This reduces the risk of investing a large amount in a single security/mutual fund at the wrong time. This principle is very powerful and works best over long periods of time. The Systematic Investment Plans (SIP) offered by mutual funds work on this principle and are therefore a highly recommended investment option.

Asset Allocation
Asset allocation is an investment portfolio technique that aims to balance risk and create diversification by dividing assets among major categories such as money market, income, stocks and cash. Each asset

class has different levels of return and risk, so each will behave differently over time. At the same time that one asset is increasing in value, another may be decreasing or not increasing as much.

Mutual Fund Basics

Its common knowledge that investing in mutual funds is (or at least should be) better than simply letting your cash waste away in a savings account, but, for most people, thats where the understanding of funds ends. In this section we endeavor to educate current and potential investors on the basics of mutual funds.
What is a Mutual Fund? What are the benefits of investing in a Mutual Fund? What are the different types of Mutual Funds? What are the types of risks?

What is a Mutual Fund?

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. It is essentially a diversified portfolio of financial instruments these could be equities, money market or fixed income instruments. The money collected in the fund is then deployed in investment avenues that help investors meet predefined investment objectives. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

What are the benefits of investing in a Mutual Fund?

The benefits of investing in Mutual Funds are as follows Access to professional money managers Experienced fund managers using advanced quantitative and mathematical techniques manage your money Diversification Mutual Funds aim to reduce the volatility of returns through diversification by investing in a number of companies across a broad section of industries and sectors. It prevents an investor from putting all eggs in one basket. This inherently minimizes risk. Thus with a small investible surplus an investor can achieve diversification which would have otherwise not been possible Liquidity Open-ended Mutual Funds are priced daily and are always willing to buy back units from investors. This mean that investors can sell their holdings in Mutual Fund investments anytime without worrying about finding a buyer at the right price. In the case of other investment avenues such as stocks

and bonds, buyers are not necessarily available and therefore these investment avenues are less liquid compared to open-ended schemes of Mutual Funds Tax efficiency Mutual Fund offers a variety of tax benefits. Low transaction costs Since Mutual Funds are a pool of money of many investors, the amount of investment made in securities is large. This therefore results in paying lower brokerage due to economies of scale Transparency Prices of open ended Mutual Funds are declared daily. Regular updates on the value of your investment are available. The portfolio is also disclosed regularly with the fund managers investment strategy and outlook Well-regulated industry All the Mutual Funds are registered with the Securities & Exchange Commission of Pakistan (SECP) and they function under strict regulations designed to protect the interests of investors Convenience of small investments Under normal circumstances, an individual investor would not be able to diversify his investments (and thus minimize risk) across a wide array of securities due to the small size of his investments and inherently higher transaction costs. A Mutual Fund on the other hand allows even individual investors to hold a diversified array of securities due to the fact that it invests in a portfolio of stocks. A Mutual Fund therefore permits risk diversification without an investor having to invest large amounts of money

What are the different types of Mutual Funds?

Mutual Fund schemes may be classified on the basis of their structure and their investment objective. By structure Open-ended Funds An Open-ended Fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. Close-ended Funds Closed-end Funds have stipulated / perpetual life based on the constitutive documents of the funds. These funds open for subscription only during a specified period and investors can initially invest in the funds at the time of the subscription and thereafter they can buy or sell the certificates of the funds on the Stock Exchanges. The market price at the stock exchange could vary from the funds NAV due to stock market factors. By investment objective Stock Market (Equity) Funds The aim of Growth Funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their assets in equities. Growth

schemes are ideal for investors who have a long-term outlook and are seeking growth over a period of time. Income Funds The aim of Income Funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, term finance certificates and Government securities. Income Funds are ideal for capital stability and regular income. Capital appreciation in such funds may be limited, though risks are typically lower than that in a growth fund. Balanced Funds The aim of Balanced Funds is to provide both growth and regular income. Such schemes invest both in equities and fixed income securities in the proportion indicated in their offering documents. This proportion affects the risks and the returns associated with the balanced fund in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market. Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth. Money market Funds The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, bank deposits and cash. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for investors as a means to park their surplus funds for short periods.

What are the types of risks?

Risk is an inherent aspect of every form of investment. For Mutual Fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the schemes investments may be affected by factors affecting capital markets such as price and volume volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other developments. Market risk At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to market risk. Inflation risk - Sometimes referred to as loss of purchasing power. Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you will actually be able to buy less, not more. Credit risk In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures? Interest rate risk Changing interest rates affect both equities and bonds in many ways. Bond prices are influenced by movements in the interest rates in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase.

Investment risks - In the sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities.

Liquidity risk - Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the fixed income market.

Shariah-compliant Investments

According to Abdullah ibn Masud, Radi-Allahu unhu, The Prophet Muhammad (P.B.U.H.) said: Seeking halal earning is a duty after the duty. In other words working to earn a halal living is itself a religious obligation second in importance after the primary religious obligations like prayers, fasting and hajj.
What is a Shariah-compliant investment? What is an Islamic Investment Fund? What does the portfolio of a Shariah-compliant Income Fund consist of? What are the portfolio constituents of a Shariah Compliant Equity Fund? What is UBL Funds SIRAJ? Who are the members on the Shariah Advisory Board of UBL Funds Siraj and what is their role? Watch our Shariah Board Members answer your most common questions related to Islamic Investments

What is a Shariah-compliant investment?

Investments which are in accordance with the Islamic Principles are called Shariah-compliant. There are three principal rules which need to be adhered to when analyzing an investment from the standpoint of Shariah permissibility. The first is the absence of interest (riba) in the investment. Islam has strictly prohibited interest (riba). This is based on the principle that it is unacceptable in and of itself for same commodity, including money, to increase in value merely by being lent to another person. The prohibition is bilateral, which means that the lender cannot receive it and the borrower cannot pay it. However, Shariah does not prohibit the making of a return on capital if the provider is willing to share in the risks of a productive enterprise. The conclusion then is that whenever capital is lent rather than invested, interest (Riba) is the return rather than profit. The second is the potential for unethical concerns in the investment mix.Muslim scholars have put together the following benchmarks clarifying what is not acceptable as an investment under Shariah.

Alcohol Brewers or distillers of alcohol or any firm exclusively involved in the production or sale of alcohol. Banks and other banking Institutions involved in interest. (Insurance companies are usually included in the this section too) Gambling Casino and gambling outlets Pornography Manufacturers, retailers and distributors of pornographic material as well as firms involved in pornographic activity. Tobacco Manufacturers of tobacco and tobacco related products. Ancillary Activity Any business though not directly engaged in the above, derives greater than 5% of its income from the above. Or any other forms whose activities the Shariah Board feels are prejudicial to the interests of Islam or Muslims. The final area relates to the nature of the contract between the parties involved. Islamic finance also places great emphasis on the validity and transparency of contracts. In addition to insisting on investment contracts being put in writing, there are clear guidelines on ensuring that all terms and conditions of the investment contract are detailed in a manner in which no disputes can arise in the future. Any contract failing to pin down its key components (e.g. price, subject matter, delivery date etc) in a manner in which the uncertainty may cause a dispute between the contracting parties is guilty of containing gharar (Unacceptable Uncertainty) and is null and void in the eyes of Shariah.

What is an Islamic Investment Fund?

The term Islamic Investment Fund means a joint pool wherein the investors contribute their money for the purpose of investment to earn halal profits in strict conformity with the precepts of Islamic Shariah. The concept of Islamic Mutual Funds has its roots in Musharaka, an Islamic investment vehicle. Musharakah is a word of Arabic origin which literally means sharing. In the context of business it means a joint enterprise in which all the investors or partners share the profit or loss of the joint venture. In an Islamic Fund the investors have the relationship of partners amongst themselves, so they are eligible to share proportionately the profit earned (or loss incurred) on their investment. The Fund Manager of an Islamic Fund works as the investment agent and manages the investment activities on behalf of the investors collective investment, against a fixed fee (known as the Management Fee). An Islamic Fund can not offer a fixed return on investment; they must carry a pro-rated profit actually earned by the Fund. Therefore, neither the principal nor a rate of profit (tied up with the principal) can be guaranteed (unless a capital protected fund).

As opposed to conventional funds, Islamic Funds are in total compliance with the Shariah rules and regulations to earn halal profits in strict conformity with the precepts of Islamic Shariah. The instruments selected for investment by the Fund Manager are approved and monitored by the Shariah Advisory Board of the Fund as Shariah-compliant. Keeping these basic requisites in view, the Islamic Investment Funds may accommodate a variety of modes of investments, such as equities, income, or balanced.

What does the portfolio of a Shariah-compliant Income Fund consist of?

Islamic Income Funds aim to provide a regular source of income to investors while endeavoring to preserve the principal investment. To achieve this goal, funds are generally invested in low-risk assets such as Islamic Banks Term-deposit accounts, Sukuks (Islamic Bonds) and Ijarah (Islamic Leasing). Sukuks, also known as Islamic Bonds, is the name of Shariah-compliant Investment Certificate issued by the Government or a private institution. Such certificates normally represent investors ownership in a fixed asset leased to the issuer. The issuer pays periodic rentals which generate profit for the investors. Ijarah is the name of Islamic Leasing products issued by the Government or a private institution. In Ijarah, the subscription amounts are used to purchase assets like real estate, motor vehicles, or other equipment for the purpose of leasing them out to their ultimate users. The ownership of these assets remains with the Fund and the rentals are charged from the users. These rentals are the source of income for the fund which is distributed to the subscribers.

What are the portfolio constituents of a Shariah-compliant Equity Fund?

In an equity fund, the investors money is invested in the shares of joint stock companies. The profits are mainly achieved through capital gains (purchasing shares and selling them when their prices are increased. Profits are also achieved by the dividends distributed by the relevant companies. Dealing in equity shares can be acceptable in Shariah subject to the following conditions: The main business of the company is not in violation of Shariah. Therefore, it is not permissible to acquire the shares of companies providing financial services on interest, like conventional banks, insurance companies, or the companies involved in some other business not approved by the Shariah (as mentioned earlier). If the main business of the companies is Halal, like automobiles, textile, etc. but they deposit there surplus amounts in an interest-bearing account or borrow money on interest, the proportion of such income in the dividend paid to the share-holder must be given as charity, and must not be retained. For example, if 5% of the whole income of a company has come out of interest-bearing deposits, 5% of the dividend must be given in charity.

The shares of a company are negotiable only if the company owns some non-liquid assets. If all the assets of a company are in liquid form, i.e. in the form of money that cannot be purchased or sold, except on par value, because in this case the share represents money only and the money cannot be traded in except at par.

What is UBL Funds Siraj?

UBL Funds Siraj is the Islamic investments division of UBL Fund Managers that is dedicated to offering innovative asset management and investment advisory services in accordance with the principles of Islamic Shariah. At UBL Funds Siraj you can benefit from an investment experience that is highly personalized, global and competitive; the result of our deep experience in the asset management sector and our strong commitment to values and ethics.

Who are the members on the Shariah Advisory Board of UBL Funds Siraj and what is their role?
All investments made in our Islamic Funds are approved and monitored by the Shariah Advisory Board (SAB) that comprises of renowned Islamic Scholars.

Maulvi Muhammad Hassaan Kaleem Muhammad Najeeb Khan

The role of the Shariah Advisory Board is to ensure compliance with Islamic Shariah principles, and this includes: Portfolio Purification Impure earnings from investments are to be purified through a donation to charity, called Zakat (purification). The Shariah Board separates the impure earnings from the capital gains and/or dividends and redistributes the rest to investors. Adequate Selection of Investment Instruments Based on the Islamic Principles, the Shariah Board determines and regularly monitors the criteria for the selection of companies or instruments in which the fund may invest. Monitoring Management The Shariah Board helps coordinate investment strategies and ensure compliance of the funds activities in accordance with the Islamic guidelines. Information Reporting The Board also prepares annual Shariah Audit and Review Reports concerning the Funds activities. This is generally included in the Funds Financial Statements.

Watch our Shariah Board Members answer your most common questions related to Islamic Investments
Watch the exclusive series of videos featuring our esteemed Shariab Advisory Board Members answering to some of the most common questions related to Islamic Finance & Islamic Investments. Click Here to view the videos.