Investment pool
A group of assets funded by identified sources, such as shareholders or investment account holders, whose income is allocated to them.
An investment pool is a set of assets that an Islamic institution funds from identified sources, such as its own equity, unrestricted investment accounts or restricted accounts, so that income can be allocated to the parties who funded it. Because moving assets between pools shifts returns between those parties, AAOIFI has an accounting standard on transfers of assets between investment pools. Clear pool records are the basis for fair profit allocation.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Profit allocation (investment accounts)The method for dividing a pool's income between the bank and investment account holders, including reserves and weightages.Unrestricted investment accountAn investment account whose funds the bank may invest at its discretion and commingle with its own in a pooled portfolio.Restricted investment accountAn investment account whose holder limits where, how or for what purpose the bank may invest the funds.Quasi-equityAAOIFI's category for investment accounts and similar risk-sharing funds, presented between liabilities and owners' equity.