Profit Equalisation Reserve (PER)

TThe Profit Equalisation Reserve (PER) helps to reduce the variability of investment returns by spreading gains and losses over several years. Using the PER, some investment profits (unexpected profit) are set aside during periods of high returns to offset losses during periods of low returns, such that overall returns are more stable over time. At any point in time, the ownership and the distribution of the PER is governed by the Mudharabah profit-sharing ratio. Upon termination of the contract, rights of contract holder over any unpaid portion of investment profit will be waived (tanazul).

Unexpected profit consists of:
a) any realized and unrealized capital gains in equity investment and dividend income that exceeded the expected equity gain; plus
b) any realized gains from the profit of Shariah-compliant fixed income instruments.

Note: Currently the expected equity gain is 8.5% p.a. and this rate might change in the future.