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Absa Capital’s gold ETF certified Shari’ah-compliant

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In a first for an exchange-traded fund in South Africa, Absa Capital has announced that its NewGold ETF has been declared Shari’ah-compliant by the group’s Shari’ah supervisory board, made

In a first for an exchange-traded fund in South Africa, Absa Capital has announced that its NewGold ETF has been declared Shari’ah-compliant by the group’s Shari’ah supervisory board, made up of jurists specialising in Islamic law.

The ruling indicates that the NewGold ETF complies with Islamic principles of ethical investing. The fund, the only commodity based ETF in the South African market, is a non-interest based product that invests directly in gold bullion. Earlier this year it became the country’s largest ETF, overtaking the Satrix40 equity index product.

The issuing company, NewGold Issuer, was incorporated for the sole purpose of issuing securities backed by gold bullion, tracking the price of gold, and is not involved in any activities that are not permitted under Shari’ah law.

The certification has opened the way for Moslem investors to gain exposure to gold through investing in a listed ETF, according to Vladimir Nedeljkovic, head of ETFs and index products at Absa Capital.

‘Absa Capital’s NewGold ETF is the largest ETF in South Africa with ZAR6.4bn assets under management,’ Nedeljkovic says. ‘Since the beginning of 2007, its assets under management have increased more than four times.’

Absa Islamic Bank’s independent Shari’ah supervisory board is entrusted with directing, reviewing and supervising the activities of the business to ensure it they are in compliance with Islamic rules and principles, including approving new products, monitoring their implementation and auditing Islamic banking operations. The board meets at least six times a year.

Absa Capital, a division of Absa Bank and affiliated to Barclays Capital, is a South African investment bank that offers clients financing, risk management and advisory solutions in a wide range of currencies and structures worldwide.

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