Wakala bil istithmar (investment agency) is a type of wakala representing an instrument in which a principal (muwakkil) appoints an agent (wakeel) to carry out investment deploying the amount and resources dedicated to the underlying purpose (on behalf of the principal) either subject, or not, to a predefined set of conditions on the way and venue of such an investment. The principal is the investor, while the agent assumes the role of an investee against a remuneration (ajr) consisting of a fixed fee (ujra thabita) and/ or a variable remuneration (ujra mutaghayyra).

For investment management, this type of wakala is used in a number of structures for over-the-counter (OTC) instruments, sukuk issues, treasury placements, and so on. Investment agency has a complex and sophisticated structure and uses such as a wakala embedded in a host contract including agency in murabaha structures or service-based transactions.

In short, the main uses/ applications of wakala bil istithmar include the following:

• Investment account offerings/ placements: such as retail or interbank placements, and any placements involving such instruments.
• Sukuk issuances that are based on wakala (wakala sukuk) or structured on the basis of, or involving an element, of wakala.
• Investment funds that are managed by an institution under wakala bil-istithmar.