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Nurul Aini Muhamed and Mervyn K. Lewis

The purpose of this chapter is to examine the nature and structure of Islamic investment funds and evaluate their governance and operation from a shari’a perspective. From beginnings in the 1990s, the funds have grown to a global industry with investors and assets drawn from many different countries. However, the industry has developed in a particular way, by taking the easy route and focusing on negative screens, and removing from investments those activities deemed to be unacceptable to Islamic precepts. It is argued here that Islamic finance and investment should be defined by what they stand for, not only what they are against. As well as complying with the ‘negatives’, Islamic investment funds need to pursue and implement the ‘positives’ in the Islamic ethos, by engaging in active monitoring of investments, participating in decision making and promoting justice, honesty and trust in economic affairs, while seeking out investments that have a positive impact on society and the environment and promote the welfare of the community. Although these issues have been largely unexplored by the industry, Western systems of socially responsible investment provide one model for how Islamic investment funds may develop in the future in terms of moving from a negative to a more positive agenda.