Aviva Shariah investment strategy

Enabling workplace pension members to align their pension investments to their values and beliefs.

Carefully designed investment strategy with a rigorous screening process to adhere to Shariah principles
Uses a glidepath to gradually reduce risk as members approach retirement
Offers all members greater flexibility and choice

What is Shariah-compliant investing?

Shariah-compliant investing draws on the expertise of Islamic scholars and other experts to make sure a strategy or fund only invests in businesses that operate, in their view, within the principles of the Islamic faith.

This means that alcohol, tobacco, pork, pornography, gambling, weapons, conventional banks and insurance companies are excluded from a Shariah-compliant investment strategy.

The approach works in the same way as an ethical fund, screening out investments that do not meet the requirements of Shariah principles.

The value of the funds may go down as well as up, and members may get back less than has been paid in.

What is the Aviva Shariah investment strategy?

We’ve designed the Aviva Shariah investment strategy to manage members’ savings through their journey to retirement, and in a way that is compliant with Islamic law. We look after the strategy from start to finish, with the aim to help members achieve the best possible financial outcome for their retirement.

The Shariah investment strategy consists of four underlying funds – Long Term Growth, Growth, Drawdown and Consolidation – giving members options for how they wish to access their savings in retirement.

The funds have been created using Shariah-compliant funds from HSBC’s well-established range of Islamic funds:

HSBC Islamic Global Equity Index Fund

HSBC Shariah Multi Asset Fund

HSBC Global Sukuk Bond Fund

Helping members throughout their journey to retirement

Historically, Shariah investors have relied on a single fund solution that doesn’t reduce risk as they approach their retirement age. This can expose members to possible losses if there is a market downturn when they are close to retirement.

To help overcome this, the Aviva Shariah investment strategy looks to manage risk throughout a member’s pension journey. In the earlier stages, it aims to grow the member's pension savings. Then, as members get closer to taking their pension savings, the strategy shifts its focus to risk reduction and capital preservation.

How the de-risking works

Until 15 years before retirement

Members are invested in the Aviva Shariah Long Term Growth Fund. This fund 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. We also diversify by investing in commodities, property and a small allocation to Sukuk bonds.
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 bonds, as retirement gets closer.

The importance of governance in our Shariah investment strategy

HSBC’s Global Shariah Supervisory Committee reviews the HSBC funds

The investment process applied to the HSBC funds in the Shariah investment strategy is approved and reviewed on an ongoing basis by the HSBC Global Shariah Supervisory Committee.

The Committee is made up of experts in Shariah principles and Islamic Scholars with experience in Islamic Finance. The Committee issues an annual Shariah certificate to demonstrate that the HSBC funds are compliant with Shariah principles.

Purification process

The companies in the HSBC funds (and so the underlying funds in the Shariah Investment Strategy) are Shariah compliant. However, it is possible they might generate a small part of revenue from non-compliant industries.

If this happens, the funds will give any impure income to charity. The amount is calculated by the Committee. The Committee’s nominated charity is the BBC’s Children in Need.

Any donated money will go 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

The Shariah investment strategy is also subject to Aviva’s structured fund governance process.

A dedicated investment fund governance team in Aviva continually reviews the funds that make up the Shariah investment strategy. Their role is to check the funds are performing as expected.

Guide to Governance at Aviva ""