Introducing Endowus Shariah Portfolios

The Endowus Shariah Portfolios are designed as a Shariah-compliant alternative to our Core Flagship Portfolios, providing investors with diversified exposure to global equities and Islamic fixed income (sukuk) markets to help grow wealth over the medium-to-long term. 

Shariah investing is based on Islamic principles – this means it follows guidelines that avoid investing in companies involved in activities that are “haram (forbidden)”, such as gambling, selling alcohol, or dealing with interest-based finance (riba).

The Shariah Portfolios offer six choices, from higher-risk portfolios (100% equities) to lower-risk portfolios focused (100% sukuk). This allows a choice of risk level and potential return that aligns with one’s long-term financial plans.

Funds in the Shariah Portfolios

The Endowus Shariah Portfolios invest in two main asset classes: Shariah-compliant equities and Islamic fixed income (sukuk).

The Shariah Portfolio – Equities

The Shariah Portfolio – Equities is made up of three funds run by experienced managers with an established track record in managing Shariah-compliant assets. 

The largest portion of the Portfolio goes to the HSBC Islamic Global Equity Index Fund. As a passively managed equity fund, the Fund offers a simple and affordable way to invest in the world’s largest and most established companies. It acts as the main, “Core” part of the portfolio. 

To balance this, the Portfolio also allocates to the Templeton Shariah Global Equity Fund, which is actively managed to invest in companies that are believed to be of good value and high quality. 

A smaller allocation into the Franklin Shariah Technology Fund allows the portfolio to have a “Satellite” exposure to attractive technology companies globally. This Fund is also the Shariah version of the popular Franklin Global Technology Fund, which has S$14.9 trillion under management at the end of Feb 2025. 

The Shariah Portfolio – Fixed Income (Sukuk)

The Shariah Portfolio – Fixed Income (Sukuk) invests equally into two funds: the Azimut Global Sukuk Fund and the Franklin Global Sukuk Fund. 

These two funds are managed in a similar way. With experienced investment teams based in Dubai, the respective team actively chooses Islamic bonds (sukuk) issued by strong and reliable companies.

Why invest in the Endowus Shariah Portfolios?

One-click access to a diversified portfolio of Shariah-compliant assets

The Shariah Portfolios offer a carefully designed, ready-made solution. 

Not all Shariah-compliant funds are created equal – Individual funds have their own investment styles and advantages. This can be confusing for investors when they seek ways to combine them into a well-balanced portfolio. 

The Shariah Portfolios are optimised so that individual investors do not need to worry about creating the right mix of investments themselves. These Portfolios are created with diversification in mind that helps grow wealth over the long term, just like our Endowus Flagship Core portfolios.

Endowus has partnered with trusted fund managers offering Shariah-compliant investments, providing more single-fund options for individual investors in Singapore. Scroll to the bottom of the article to learn about how you can purchase the portfolios.

Strict adherence to Shariah Principles

The underlying funds of the Endowus Shariah Portfolios are managed by experienced teams with an experience of up to 35 years in Shariah investing, managing a total of more than S$15 billion in Islamic investing products as of December 2024.

Generally, all equity investments are carefully checked using a Shariah filter which ensures that the funds avoid investing in companies involved in activities that are "haram". 

These activities include, for example, interest-based financial services (like non-Islamic banks), weapons manufacturing, adult entertainment, pork products, alcohol, and tobacco. The filter also excludes companies with excessive debt.

When investing in Sukuk, fund managers exclusively select instruments that have received a formal fatwa and undergone religious review by Islamic scholars. 

This guarantees that the Sukuk adheres to Shariah principles, meaning it does not function like a conventional interest-based fixed-income product. Additionally, the Sukuk must be backed by clearly defined or existing assets, support projects that benefit society, and avoid “haram” business activities, among other criteria.

Investing in a world of conglomerates

Many Shariah investing scholars recognise that modern companies have diverse business activities, and it may be difficult to find an investible company that is free from haram activities or debt. 

To allow for some flexibility, investments may be made in companies where less than 5% of their revenue comes from "haram" activities, and some leeway is given to companies taking up a reasonable level of debt to operate their business. 

Importantly, any company must be approved by certified Shariah scholars before it can be included in the investment funds.

Measures to strengthen Shariah compliance

To foster compliance of Shariah principles, fund managers are putting in place extra measures. 

HSBC Asset Management uses an “income purification” method – if a company in their fund earns a small portion (less than 5%) of its revenue from “haram” activities, the corresponding part of any dividends received is donated to charities that support Muslim communities.

Investing for both financial growth and Islamic values

While following and uploading Islamic values, it is crucial to aim for good financial returns to have the potential to grow wealth. The Endowus Shariah Portfolios are designed to do both and this is where the experienced fund managers of the underlying funds come in. 

Our active fund managers, for example, carefully select Shariah-compliant equities and Islamic fixed income (sukuk) that not only meet Shariah standards but are chosen for their strong financial potential. Managers look for investments issued by reliable companies with good business prospects.

This combination of Shariah compliance and careful investment selection helps you grow your money while staying true to your values. 

Ongoing assessment of underlying funds by Endowus Investment Office

The underlying funds of the Endowus Shariah Portfolios were carefully selected by the Endowus Investment Office, screening for Shariah-compliant funds that have a proven track record of strong performance and good management. We believe these are among the best Shariah-compliant funds available to retail investors in Singapore today.

Endowus also recognises that the Shariah investment landscape is constantly evolving, and new funds may become available over time. To ensure client portfolios consistently access the best opportunities, the Endowus Investment Office conducts regular reviews of the selected funds with the aim of confirming the funds' continued strong performance and adherence to high standards. 

Endowus continuously engages with other fund managers to identify and potentially introduce new funds that could further enhance the Portfolios.

How do the Shariah Portfolios compare to other Core Portfolios like Flagship?

Portfolio exposure

The Shariah Portfolios have some key differences in portfolio exposure compared to the Endowus Core Flagship Portfolios. These differences arise primarily from the distinct characteristics of the underlying funds used in each portfolio.

Equity Portfolio Exposure

The geographical allocation of the Shariah Equities Portfolios is generally less diverse than the Endowus Flagship Core Portfolio. However, it remains aligned with the broader global equities index, featuring a significant allocation to US equities alongside diversification into other markets like Japan. This allocation is influenced by the characteristics of the underlying funds:

• The HSBC fund tracks an index of the top 100 largest Shariah-compliant companies globally. Due to current market trends, this leads to a US-centric bias in the Shariah Portfolio, as many leading companies are based in the US (as of March 2025). It is important to note that this index will evolve with market changes.
• The Templeton Global Shariah Portfolio provides some balance to this US tilt by including a greater allocation to non-US markets, thus enhancing diversification.

In terms of sectors, the Shariah Equities Portfolios allocation tends to have a higher concentration in technology companies. This is because technology companies often face "lower" hurdles in meeting Shariah screening criteria compared to sectors like financials and real estate. Nevertheless, the equity portfolio maintains a broad diversification across various sectors.

Fixed Income (Sukuk) Portfolio Exposure

The Shariah Fixed Income (Sukuk) Portfolio differs notably from a broader fixed income portfolio due to its focus on sukuk issuers. Sukuk issuers generally have a slightly lower average credit quality compared to the broad fixed-income market. Regardless, all sukuk in the Shariah Portfolio are above the Investment Grade and have undergone rigorous scrutiny by the credit research teams of the underlying fund managers.

Furthermore, the sukuk market is primarily based in the Gulf Cooperation Council (GCC) region, though there is increasing involvement from Asian Muslim countries like Indonesia and Malaysia. This regional focus distinguishes the sukuk market from the broader fixed-income market, which typically has a different geographical distribution. 

Lastly, the underlying fund managers of the Shariah Fixed Income (Sukuk) Portfolio specialize in credit analysis and actively selecting securities. As a result, the Portfolio tends to hold sukuk issued by corporations rather than governments, which reflects the current state of the market.

Portfolio historical performance

Equity Portfolio Historical Performance

The performance of the Shariah Equity Portfolio is directly related to the characteristics of its underlying funds. The higher allocation to technology companies means the Portfolio tends to perform better when market conditions favour higher-risk investments (e.g. in 2020 and 2023). Conversely, it may perform less well during periods when investors prefer lower-risk investments (e.g. 2022).

For similar reasons, the Portfolio may also experience higher risk levels, such as a larger maximum drawdown (the largest peak-to-trough decline) and potentially lower rolling 12-month returns. Therefore, investors need to understand their own investment goals and risk tolerance to select the most suitable portfolio for their long-term wealth growth.

Fixed Income (Sukuk) Historical Performance

The Shariah Fixed Income (Sukuk) Portfolio's performance is influenced by the unique characteristics of the sukuk market. Sukuk typically have a shorter duration compared to the broader fixed-income market, making them less sensitive to changes in interest rates. 

Additionally, sukuk tend to have a lower correlation with other parts of the fixed income market due to their distinct regional exposures. These factors have contributed to the Portfolio's strong performance over the past five years. 

However, it is important to note that during market environments where fixed income assets with longer durations are favoured, the Portfolio may perform less well compared to non-Shariah fixed-income options.

How can I invest in the Shariah Portfolios?

Just like the Endowus Core Flagship Portfolios, the Shariah Portfolios are offered in six different versions with differing equities and fixed income (sukuk) allocations. Investors are invited to select the portfolio that best fits their investment goals.

Step 1: Assess your risk appetite and time horizon

First, think about why you want to invest. Are you saving for retirement? Your children's college education? Or for a dream holiday that you’ve been thinking about?

Once you have your investment objective noted down, allocate a suitable time horizon for it – how much time do you have to reach that goal? Retirement might be far off, like 30 years. Children’s college could be closer, in 5 years. A holiday might be just a year or two away.

Then, think about how comfortable you are with investment ups and downs. Some people are okay with more risk to potentially earn more (“high risk, high return” approach). Others prefer a safer approach, even if it means lower potential returns. Would you prefer investments that are more stable, or are you willing to take on more risk for the chance of higher growth?

Thinking about these things will help you choose the right portfolio for you.

Step 2: Choose the right investment portfolio for your goals

Step 3: Access the portfolios via Fund Smart

Once you've picked a portfolio, you can use the links below to access the portfolios via Fund Smart. Keep in mind that these portfolios are just suggested allocations, and you can always adjust the portfolios to better fit your needs.