UOB Asset Management (Malaysia) has launched its first Shariah-compliant ESG fund to provide retail investors with income dividends and capital appreciation over the medium to long term through sustainable investments.

The United-i Asia ESG Income Fund (UiAIF) invests in a diversified portfolio of equities and debt instruments issued by companies across Asia (excluding Japan) that comply with Shariah principles and adopt environmental, social and governance (ESG) considerations into their business models and practices.

As both Shariah principles and sustainable investing promote governance stewardship and value creation, combining these approaches will create a stronger portfolio for investors’ long-term benefit, according to a company statement.

Shariah-based investing prohibits interest, security lending and short-selling. It also incorporates negative screening to exclude sectors such as tobacco, alcohol and breweries, weapons and armaments, as well as other non-halal products. This will be complemented by sustainable investing that uses positive screening as a means of selecting the best performing companies that offer environmentally friendly products and services, or have socially responsible business practices.

The UiAIF is suitable for retail investors who have a moderate risk profile. It is available in Malaysian ringgit, Australian dollar and US dollar with an initial minimum investment of 1,000 ringgit, A$1,000 and US$1,000 respectively. UOBAM (Malaysia) is the manager of the UiAIF, while UOB Islamic Asset Management Sdn Bhd is the investment manager.