Overview
For many years, Shariah-compliant investing within the UK defined contribution pension space has focused on access. Is there a fund available? Can members invest in line with their faith?
That focus has played an important role in widening participation and ensuring more members can engage with pension saving in a way that reflects their beliefs. But as the market evolves, so too must the conversation.
The next stage of development is about ensuring that members who choose
Shariah-compliant investing are supported not just at the point of entry - but throughout their journey to retirement.
That’s why we’re pleased to be introducing a new Shariah-compliant lifestyle strategy for selected Fidelity Master Trust clients. Designed by Fidelity’s Investment Solutions Team and implemented using BlackRock funds, it aims to support long-term growth while helping members manage risk as they approach retirement.
Building on strong foundations
Historically, Shariah-compliant pension offerings have often centred on global equity exposure.
That reflects both the structure of the Shariah investment universe and the importance of long-term growth in defined contribution saving.
But as pension design has matured more broadly - particularly with the development of lifestyle strategies and default pathways - it has become increasingly clear that supporting members through the full retirement journey requires more than a single asset class.
This is not about replacing what has come before but building on it.
Designing for the full journey
This led us to consider how we bring the same level of design thinking to Shariah-compliant investing as we do to the wider pension market. In practice, that means thinking beyond individual funds and focusing on the overall investment journey.
For most members, that journey needs to balance two things: growth in the early years, when time horizons are long, and risk management as retirement approaches, when outcomes become more sensitive to market movements.
In conventional strategies, this ‘glidepath’ approach is well established. The challenge was to deliver a similar experience within the constraints of Shariah-compliant investing.
Introducing our enhanced Shariah fund range
Shariah-compliant investing operates within a set of clear and well-defined principles. And all investments must meet strict governance standards overseen by independent Shariah scholars.
This creates a different investment universe - one that is narrower and behaves differently.
Sukuk, for example, can play a stabilising role in portfolios, but with different risk characteristics to conventional bonds. Equities, meanwhile, can be more concentrated due to sector exclusions.
So the objective is not to replicate a conventional strategy exactly, but to achieve the best possible retirement outcome within these constraints.
That thinking underpins the evolution of our Shariah-compliant proposition within the Fidelity Master Trust.
Alongside enhancing the self-select range, we have introduced a Shariah-compliant lifestyle strategy - a guided investment pathway designed to evolve as members move towards retirement.
This approach reflects the same core design principles as FutureWise, our default investment strategy for more than 420,000 workplace investors. Members remain invested in growth assets for most of their working lives, before gradually reducing risk in the years leading up to retirement.
For those who choose this approach, it provides a clearer structure and reduces the need for ongoing intervention - while remaining fully aligned with Shariah principles.
We designed our solution to work within the available investment universe, using a combination of global Shariah equities and Sukuk to support both growth and risk management over time.
We selected BlackRock to deliver broad index exposure within the Shariah-compliant universe while helping to reduce concentration and support more consistent diversification in the long run.
This brings greater consistency in how Shariah compliance is governed, while giving us the flexibility to evolve the proposition as new opportunities emerge. In a developing market, that ability to adapt over time is just as important as the solution we deliver today.
Why this matters now
Members are more engaged, more aware, and more conscious of how their money is invested. Employers are placing ever greater emphasis on being inclusive, and consultants are increasingly focused on whether investment design works effectively for different member needs.
Within that context, Shariah-compliant investing is becoming a more prominent part of the conversation.
The expectation is shifting - from simply providing access, to providing solutions that support good outcomes over the long term. As a pension provider we feel a duty to provide appropriate retirement solutions to all our members, and we believe our enhanced approach meets that expectation.
“As co-lead of the Muslim Community, I’m proud to see the launch of Fidelity’s Shariah-compliant lifestyle strategy.
For many individuals, pensions represent a significant asset, so it’s important that members have the option to grow their savings over the long term in a way that aligns with
Shariah-compliant principles.
With engagement in pensions a growing focus across the UK, offering investment options that align with members’ beliefs can play an important role in helping individuals connect more meaningfully with their savings. This represents a strong and important step forward.”
Nafeesa Zaman, Co-lead, Fidelity Muslim Community; Client Support Manager, Workplace Investing
Looking to the future
We continue to believe that members should be able to invest in line with their beliefs - and have confidence that their investment strategy is designed to support them all the way through to retirement.
The Shariah investment universe will continue to develop, and our ambition is to evolve with it - continuing to place member outcomes at the heart of our decision-making.
For more information, please contact your Fidelity representative.