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Using Agency Agreement For Portfolio Management
Can we use agency agreements for portfolio managers?
In a portfolio management contract, the investor requires the investment manager to invest funds in various Shariah-compliant ventures.In such a contract, profit and loss is not shared between the investor and the agent but the agent is remunerated for his services. This fee may be paid as a fixed lump sum or as a percentage of investment, but not as a percentage of profit. The investment agent may also be given a performance-based bonus for achieving required returns and, in such a case, the contract becomes a hybrid of the agency agreement and the Mudarabah.

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