Investment Policy Statement


The purpose of this Investment Policy Statement is to establish a clear understanding between the investors of Serendib Sharia Investment Ltd (SSIL) and Kenanga Investment Corporation Ltd (KICL), portfolio manager to SSIL, as to the investment objectives and policies applicable to the Serendib Sharia Investment Ltd.

This Statement Will

  • Establish reasonable expectations, objectives, and guidelines in the investment of the Serendib Sharia Investment Ltd’s portfolio of assets.
  • Set forth an investment structure detailing permitted assets, normal allocations and permissible ranges of exposure for the Serendib Sharia Investment Ltd’s assets.
  • Establish effective communication between the Investors of Serendib Sharia Investment Ltd and the portfolio manager Kenanga Investment Corporation Ltd.
  • Create the framework for a well diversified portfolio mix that can be expected to generate acceptable long term returns at a level of risk suitable to Serendib Sharia Investment Ltd.

This Statement has been developed from an evaluation of many key factors which impact the investor’s specific situation and investment objectives. This Statement is not a contract. It is intended to be a summary of an investment philosophy that provides guidance for the Investors of SSIL and the portfolio manager, KICL.

Serendib Shariah Investment Ltd Investment Objective

The main investment objective of Serendib Sharia Investment Ltd (SSIL) is to seek long term capital appreciation through investing in Sharia compliant companies listed (White List) in Colombo Stock Exchange (CSE) representing growth sectors of the Sri Lankan economy.

Serendib Shariah Investment Ltd Portfolio of Assets

The Investor recognizes that the objectives of the portfolio cannot be achieved without incurring a certain amount of principal volatility because the portfolio of assets will invest exclusively in Sharia compliant growth shares listed in the Colombo Stock Exchange.

The company will follow a very strict policy of investing only on Shariah Compliant Listed Equity with a policy of exit within a pre determined period in the event of a White List Equity getting classified as a Non Sharia Compliant at any time.

Following risk mitigation factors will be followed by the portfolio managers to ensure long term stable growth of the portfolio of SSIL assets.

At any given time, Serendib Sharia Investment Ltd assets will have following maximum investment exposure limits and investment controls:

  • Will invest only in shares listed in CSE
  • 5% of the total assets will not be invested on a one single share
  • 20% of the total assets will not be invested on a one single sector
  • Will not invest more than 10% in any one company’s issued share capital
  • Will not make investments for the purpose of gaining management control of a company

Kenanga Investment Corporation Ltd, with their partner for “White List” will conduct through research and due diligence and select companies that are exposed to Sri Lanka’s long-term growth potential with excellent business models and sound management while ensuring the investments are Sharia Compliant according to the White List.

No guarantees are given about future performance and this statement shall not be construed as offering such guarantee.

Serendib Sharia Investment Ltd Equity Selection Criteria

The main objectives of Serendib Sharia Investment Ltd equity selection criteria are to:

  1. Maximize the total return on investment (stock appreciation plus any dividends received) for the targeted holding period.
  2. Limit risk (according to SSIL’s risk tolerance level).
  3. Maintain an appropriate degree of portfolio diversification.

Kenanga Investment Corporation Ltd, the portfolio managers to the company, will conduct through macro economic research to identify economic sectors with medium to long term growth potential.

Once these sectors are identified, Kenanga Investment Corporation Ltd will conduct in-detail due diligence to select Sharia compliant companies that are exposed to these sectors with excellent business models and sound management.

Finally individual stock lists representing each growth sector will be developed for the investment management purpose of Serendib Sharia Investment Ltd portfolio of assets.

KICL will on a Weekly basis review the Portfolio with the “White List” and if any stock already invested has been removed from the list, the stock will be liquidated within a reasonable period (no more than 15 market days) even at a loss to ensure the Purity of the Portfolio conforming to Sharia Principals. There will be no exceptions to this rule.