 In this module, we shall continue with our discussion on investing in shares and we would like to use a generic model of an Islamic equity fund to explain certain issues. We would not be going into a lot of details of Islamic equity fund management, but a rough sketch of what should be done to develop an Islamic equity fund or what fund managers do to set up a Sharia compliant equity fund. The first step is to identify an Islamic universe. Islamic universe of stocks. In case of Pakistan, for example, PSX publishes a list of Sharia compliant stocks listed on PSX. That is what we mean by an Islamic universe. So if a fund manager is looking to set up Pakistan Islamic equity fund, the relevant Islamic universe for that fund manager would be the Sharia compliant stocks listed on PSX. So you have to identify an Islamic universe. If it's a global equity fund, then the fund manager can pick up one of the universes identified and developed by MSCI, S&P Dow Jones or some other index providers in the domain of Islamic asset management. So it all depends what you want to do. Second is you have to decide on your Islamic investment criteria as well as your other financial investment criteria. In many ways, if you have already identified an Islamic universe, if it was PSX Islamic universe, then you have already agreed with the Sharia screening methodology as adopted by PSX. So you don't have to worry about an Islamic investment criteria. This is already there. So you would be focusing on only financial investment criteria. So what kind of approach you want to take for the management of the stock. Then comes stock portfolio. So this Islamic universe might have 50 stock or 100 stock or in case of a global universe, it could have 50,000 Sharia compliant stock. As a fund manager, you are going to pick only a handful of stocks to be put into your fund. So based on your investment criteria, you would pick up stocks. The stocks which you think are going to be good for your profitability i.e. the profitability of the fund. So you would do stock picking. This is called stock picking. When you adopt a benchmark, a backtrack performance, so you have a benchmark. For example, you say this is Pursi Global Islamic Equity Index. This is your benchmark. What does this mean? You are telling the investors that I am attempting to emulate the performance risk return profile of this benchmark. Either I am going to emulate it or I am going to beat it by few basis points. Always my performance is a little better. And then you backtrack performance of your portfolio. In order to convince the investors, you actually get the historical data on those stocks. And for example, if you have 15 years backtrack performance, you will be using 15 years data on those stocks and to see what would have been the performance of your portfolio. And whether this was better than your benchmark or not. If it was better, you can always say that had I constructed this portfolio 15 years back, my performance would have been this much today, i.e. if I had offered this fund to you 15 years ago and if you had invested $1 with me, your this $1 would have become $15 for example. So this is step number three. Step number four is now you have done all your homework. You have identified your portfolio. You have done backtrack performance. Then you would go to a big investor for seed investment, a big investor who might be willing to pay 15 to put $15 million into your fund, $30 million normally for a global equity fund, a minimum is about $30 million US dollars into the fund in the form of seed investments to ensure that the portfolio generates some return. And once you have got the seed investor, then you start marketing this to general public. Anyone you would like to sell this fund to when I say sell this fund to shares into this fund, you will be starting marketing of your fund. And if you are lucky, you will get quite a few good investors. And it may very well be the case that you have got quite decent AUM assets under management, which is also called the size of the fund. In case of Pakistan, there are certain banks which have started which which offer Islamic funds, and they are managing a lot of money for wealthy and institutional investors in Pakistan in a Sharia compliant way.