Investment funds

Muhammad Zulkif, Muhammad Talha, Quttbu-din

Investment fund

 An investment fund is a supply of capital belonging to numerous

investors used to collectively purchase securities while each
investor retains ownership and control of his own shares. An
investment fund provides a broader selection of investment
opportunities, greater management expertise, and lower
investment fees than investors might be able to obtain on their
own.
Types of Investment funds

Open ended:
The Open-ended fund are those, whose shares units can bought or
redeemed directly from the fund at their net asset value (NAV) shares/unites of
these funds are traded over the counter ( OTC) of the fund.

Close ended:
The close ended funds are those whose shares/units cannot be
bought or redeemed directly from the fund rather they are quoted on the stock
exchange. The price of the share/units of the fund is determined by demand and
supply mechanism like shares of listed companies.
Management models/structures

Mudarabah Model:
In this model, the collected funds are used on
Mudarabah contract in which manager acts as mudarib and share profit with the
investor ( ra’b ul maal). The share of fund manager is called as Mudarib share.

Wakalah model:
In this model, the collected funds are used on wakalah
contract in which manager act as wakeel and get a fee for his services which is
known as wakalah fee. This fee has nothing to do with the profit.
Objectives of Investment fund

 The objective of an investment fund is to pool Investors ‘ funds in order to invest in

shariah compliant avenues thereby producing ample return for both Investors and fund
manager while at the same time preventing the fund capital.
 Investor

Pool of fund collected

in the investment Dividen
fund d

Custodian/
Trussteers
Investment fund
Fund Manager

Invested in securities,
sukuks and real
Fund
Generates estates
Administrator
Return

Fund assets
Statement of Net Assets

The statement of net assets shall include all assets and liabilities present at the
end of the financial period. These should be segregated into relevant
classifications. Further, the standard explicitly states that the Fund's shares/units
along with net asset value per share / unit should be presented at the bottom of
this statement.
Accounting policies which are applied to value assets and liabilities should be
used consistently. In case of change in such policies, a disclosure should be made
to this effect stating reason of change and any material impact of the same in
the current financial statements.
Sample Statement Of Net Assets
Accounting treatment an disclosure
requirements of liabilities
Liabilities generally would include the following items:
 Accounts payable (such as shares or units redeemed but not paid for,
securities purchased on credit, and directors' or trustees' fee payable)
 Accrued liabilities (such as outstanding commitments)
 Other liabilities (such as prepaid revenues, dividends and
distributions payable).
Sample statement of portfolio investments,
receivables and financing
Sample Statement Of Operation
Sample statement of changes innet assets
Sample statement f changes in net assets
Samle statemenet of financial Highlghts