Designing long only investment products that comply with shari'a, or Islamic law, is old hat. According to Kuala Lumpur-based Islamic Finance News, globally some 400 funds cater to Islamic investors by observing shari'a proscriptions against interest income and investing in companies that produce alcohol or tobacco, among other things. But Islamic law also forbids selling anything one does not own, which would crimp any short-seller's style. These restrictions have effectively stymied attempts to construct shari'a-compliant hedge funds. Until now, that is. In June, London-based Barclays Capital and consulting firm Sha-riah Capital in New Canaan, Connecticut, launched the first shari'a-compliant investment platform.
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