Takaful Investment Portfolios: A Study of the Composition of Takaful Funds in the GCC and Malaysia

Chapter 5

Exploring Investment Behaviours and Investment Portfolios of Takaful Operating Companies in the GCC and Malaysia

The different structure of takaful in contrast with conventional insurance requires special attention once an investment strategy is under investigation. In particular, the investment strategy for each of the funds under the takaful structure, which are the shareholders’ fund, general fund, participants’ special fund (risk protection part of family takaful), and participants’ fund (savings part of family takaful), should be individually studied. The rationale for this is the nature of liabilities under each fund, which would require a different investment strategy or composition. For the purpose of the study, under the family takaful, the participants’ special fund and participants’ fund are combined under one fund called “family funds.” The reason for combining them was the difficulty in segregating the data for these funds as the IT system used by many takaful operating companies cannot provide the needed detailed information accurately.

As identified in Chapter 1, the first aim of this study is to explore the asset classes comprising investment portfolio composition of the shareholders’ fund, general fund, and family funds of takaful operating companies. To achieve this objective, explorations of portfolio composition were undertaken for each of the funds mentioned and the results are presented in the following sections. The focus of this chapter is to present ...