Tapping into both domestic and international market instruments has paid off well for Shariah investments in 2023, Etiqa Insurance and Takaful Group CEO Kamaludin Ahmad shared with IFN Investor.
Operating as Etiqa Family Takaful for life policies and Etiqa General for other coverage, he said contributions to a common Tabarru pool are channeled into the Participants Risk Fund (PRF) for meeting claims and the Participant Individual Fund (PIF) for investment or savings.
For the Takaful PRF and PIF funds, Etiqa’s investments are predominantly in Malaysia (99.9%), with minor portions in China and Saudi Arabia.
Chart 1: ROI for FY2023:
| Entity | Total ROI |
| Etiqa Family Takaful | 6.12% |
| Etiqa General Takaful | 4.52% |
| Overall | 5.74% |
Kamaludin said this investment strategy has yielded good returns, with Etiqa achieving a total ROI of between 4.5% and 6.5%, resulting in an overall ROI of close to 6% for the financial year 2023.
Both PRF and PIF are invested exclusively in Shariah compliant assets, including equities, Sukuks and money market instruments.
For local Shariah equity investments, only stocks approved by the Securities Commission Malaysia are considered, while for Shariah fixed income, only Sukuks are chosen.
Separately, for Takaful Investment-Linked Product (ILP) funds, 85.5% of investments are in the Malaysian market, with the remaining 14.5% invested in the global market, subject to specific investment mandates.
Kamaludin said the investment team monitors the Shariah compliance strategies for foreign Takaful ILP funds, disclosed in monthly fund factsheets by the underlying fund manager. The pre-trade compliance system will provide alerts to ensure all investments are aligned with the Shariah guidelines.
Additionally, Etiqa’s Shariah Committee will review and monitor all Shariah-related investment activities monthly, ensuring the highest standards of ethical and compliant financial management.
Chart 2: Takaful ILP fund performance for FY 2023
| Takaful ILP Fund | FY 2023 |
| Dana Ekuiti Prima Takaful (DEPT) | 11.38% |
| Benchmark | 0.46% |
| Dana Syariah Seimbang (DSS) | 8.78% |
| Benchmark | 1.94% |
| Dana Pendapatan Prima Takaful (DPPT) | 8.07% |
| Benchmark | 2.84% |
| Dana Syariah Indeks Ekuiti Global (DSIEG) | 32.74% |
| Benchmark | 40.81% |
Source: Etiqa Takaful
Kamaludin said all local Takaful ILP funds outperformed their benchmarks for FY2023. The best-performing local Takaful ILP fund is the Dana Ekuiti Prima Takaful which delivered a return of 11.38%.
Dana Syariah Indeks Ekuiti Global (DSIEG), an index tracker fund following the Dow Jones Islamic Titan 100 Index, delivered a 32.74% return for 2023. However, Kamaludin explained the variation in DSIEG’s performance relative to its benchmark is primarily due to tracking errors.
“By focusing on Shariah compliant investments, we not only ensure financial growth and security for our participants but also promote ethical financial practices that contribute positively to the global economy.”
