Investment Principles: Tabung Haji

In carrying out its function as an investment institution, Tabung Haji has always adopted a prudent approach in analyzing the investment proposals submitted to the board. The investment philosophy of Th encompasses a medium to long term perspective that emphasizes on growth sectors that benefit from changes and improvement in the industrial structure and economy. Th focuses on those companies with good track records that will lead the economic growth of each industry and on those companies who will be able to sustain high earnings growth. In view of this, Th’s investments are mostly for the long term with emphasis on high dividend rates.

With a cautious investment approach, emphasis is placed on the fundamentals of a company, its superior management efficiency and high growth potential sectors with synergies in the industry so as to safeguard and ensure success of Th’s investments. Diversifying into various sectors provides widespread hedging opportunities, which ensure security in investment and offer good returns.

Th’s main investment objective is to produce steady incremental returns. The decision-making process is in line with Th’s investment choices that are consistent with its overall philosophy of long-term growth, risk minimization and steady investment returns. Key investment decisions are taken by the board of Th whose members are appointed by the minister in the prime ministers department.

Further, Th is recognized as an approved investment institution under the Malaysian government’s national development policy. As such, it is invited by companies to participate in their restructuring exercises to reflect Bumiputera and local equity participation. Th is also an advisor to the Majlis Penasihat Ekonomi Negara or Malaysian Economic Advisory Council that is responsible in devising Malaysia’s policy with regard to its financial system for the next 10 years. Participation in this council enables Th to contribute to the efficient and effective running of Malaysia’s financial system, especially that of the Islamic financial system. It also ensures that Th’s investment policies are in line with national policies.

Source: Towards Islamic Banking: Experience and Challenges, Institute of Policy Studies. Republished with permission.