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What Malaysian Investors Need to Know About Shariah-Compliant Unit Trust and It’s Relation to Interest Rates
12 Jan 2026  I  3 mins read

Table of Contents

  1. What are Shariah-compliant unit trusts?
  2. How interest rates affect Shariah-compliant unit trusts
  3. Benefits of investing in Shariah-compliant investments
  4. How to start investing in Shariah-compliant unit trusts

Short on time? Here’s what to expect from the article:

  • Shariah-compliant investment vehicles enable investors to grow their wealth while adhering to Islamic principles.
  • When interest rates fall, Sukuk with higher fixed rates becomes more valuable due to the inverse relationship between interest rates and bond/sukuk prices.
  • Investors get the opportunity to diversify their portfolio across equities, sukuk, and other Shariah-compliant money market instruments.

Interest rates typically play a crucial role in shaping investment outcomes, and fluctuations in interest rates can have significant impact on Shariah-compliant unit trusts, a cornerstone of Islamic finance in Malaysia. Along with interest rates, which play a crucial role in shaping investment demand, the country’s economic environment also influences investor sentiment.

For instance, to support the economy amid rising global trade uncertainty, Malaysia’s central bank lowered its overnight policy rate (OPR) by 25 basis points for the first time in five years. According to Reuters, economists expect the central bank to hold this rate steady through 2027.

What are Shariah-compliant unit trusts?

Shariah-compliant unit trusts or mutual funds, are medium- to long-term Islamic investment products. These unit trusts combine the funds of many investors into a single pool and spread the investment across various assets and different regions. Investors can spread their investments across Shariah-compliant equities Sukuk, commodities, and Islamic money market instruments in global markets.

Shariah-compliant unit trust funds exclude investments in Shariah non-compliant activities, such as gambling, alcoholic beverages, and services related to conventional banking that earn interest, insurance with interest-based premiums, and other financial services involving excessive uncertainty or prohibited practices. Investors gain access to investment options that comply with Shariah principles.

How interest rates affect Shariah-compliant unit trusts

Sukuk holders receive returns based on the profits generated by the underlying asset, while traditional bondholders receive fixed interest payments. The value of a Sukuk usually depends on the performance of the underlying assets and may appreciate if the asset value is appreciated, while bond returns depend upon interest rates.

In a low-yield environment, institutional investors, including insurance companies and pension funds usually increase their allocations to fixed-income securities, such as Sukuk and bonds, to meet their long-term obligations. However, if the market remains down for an extended period, investors may struggle to find attractive returns once the bond and/or sukuk matures. Hence in a low-interest-rate environment, stability-seeking investors usually prefer to invest in bonds and Sukuk.

Benefits of investing in Shariah-compliant investments

Investors can tailor their risk appetite and Shariah investment goals by investing in Shariah-compliant unit trusts, available across various asset classes.

  • Diversification benefit: Investors can diversify the portfolio across different asset classes and geographies, reducing overall risk.
  • Affordability: New investors can start their investment journey with a regular savings plan, beginning at MYR100, making investing more accessible.
  • Professionally managed: Professional fund managers typically manage Shariah-compliant unit trusts in Malaysia, ensuring expert oversight.
  • Liquidity: Most unit trusts in Malaysia typically offer daily redemption and subscription options, allowing easy access to funds.

How to start investing in Shariah-compliant unit trusts

  • Investors can open a current or savings account to start their investment journey with Shariah-compliant unit trusts.
  • Existing clients can log in to their SC mobile app and select “Investment profile” to learn more about their risk profile.
  • Once it is complete, click on unit trust and browse through the funds to invest.
  • One can automate monthly savings by setting up a regular savings plan or choosing a one-off lumpsum purchase.

Investors can also utilise the Interactive Fund Library for research and fund comparisons and select from over 250 fund offerings.

To get started, kindly leave your contact information here and one of our Relationship Managers will get in touch with you. 

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General Disclaimer

This article is for general information only and it does not constitute an offer, recommendation or solicitation of an offer to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This article has not been prepared for any particular person or class of persons and does not constitute and should not be construed as investment advice or an investment recommendation. It has been prepared without regard to the specific investment objectives, financial situation or particular needs of any person or class of persons. You should seek advice from a licensed or an exempt financial adviser on the suitability of a product for you, taking into account these factors before making a commitment to purchase any product or invest in an investment. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the product or service described herein is suitable for you.

You are fully responsible for your investment decision, including whether the investment is suitable for you. The products/services involved are not principal-protected and you may lose all or part of your original investment amount. Investment products are not deposits and are not obligations of, not guaranteed by, and not protected by the Bank or any of the affiliates or subsidiaries, or by Perbadanan Insurans Deposit Malaysia (“PIDM”), any government or insurance agency.

Standard Chartered Bank Malaysia Berhad & Standard Chartered Saadiq Berhad (the “Bank”) expressly disclaim any liability and responsibility for any loss arising directly or indirectly (including special, incidental or consequential loss or damage) arising from the financial losses of the investment products due to market condition.

For Takaful / Insurance Benefits

The benefit(s) payable under eligible certificate is protected by PIDM up to certain limits. Please refer to PIDM’s Takaful and Insurance Benefits Protection System (“TIPS”) Brochure for more information.

The information stated in this article is accurate as at the date of publication.

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