Accentuating the positive: governance of Islamic investment funds

Purpose - The purpose of this paper is to examine the nature and structure of Islamic investment funds and evaluate their governance. Design/methodology/approach - The methodology employed is the conceptual framework of Islamic economics. Findings - It is found that Islamic investment funds have grown rapidly this decade: in Malaysia alone, the number ofshari'a‐compliant funds has grown from 17 in 2000 to 149 in 2008, and at a global level there are 650 funds in operation. However, the industry has developed in a particular way, by focusing on negative screens, and removing from investments those activities deemed to be unacceptable to Islamic precepts, rather than pursuing as well the implementation of other aspects of the Islamic ethos. Originality/value - The conclusion reached is that, if the Islamic investment fund industry is to provide more completely for the religious and financial aspirations of investors, it needs to go beyond the negatives and to also accentuate the positive and, drawing upon Islamic governance guidelines, actively seek out investments that have a positive impact on society and the environment and promote the welfare of the community. These issues hitherto have been largely unexplored.