Shariah Compliant Mutual Funds
There are only 2 Shariah compliant mutual fund schemes in India, Tata Ethical Fund and Taurus Ethical Fund
What makes them Shariah based
Most primary thing that makes them Shariah based is they follow a Shariah stock index S&P Shariah or CNX Shariah). What this index is and what stocks it contains will be a separate discussion. Some of its characteristic:
- Investing in islamically legal business companies.
- Debt is not high.
- Interest income is very low.
- Long term investment.
- No short-selling or day trading which is same as betting.
- No liquid investment in interest bearing components.
- No lending of MF assets.
- No investment in other mutual funds.
- No investment in any derivatives.
Fund Details
Tata Ethical Fund:
Tauras Ethical Fund:
Fund Performance:
It is important to also see if your investment is giving your profit or loss. Else you would be better off not investing at all.
Performance of all 3 Funds is below average compared to other Equity Funds.
They are not making loss but the profit is very small about 10-13% over 3 years. This obviously is far less than inflation. But this is the state of most halal investments; the returns are very less.
Perhaps this is the test of Allah, most haram investments will give excellent returns.
Concluding Notes
- If you are determined to invest in MF then Tata Ethical Fund can be considered.
- Goldman Sachs CNX Nifty Shariah Index Exchange Traded Fund itself truthfully declares that although they follow a Shariah based stock index they are not completely shariah compliant. This can be found in its Scheme Information Document.
For more Details visit their official website
Tata Ethical Mutual Fund: http://www.tatamutualfund.com/our-funds/equity/sectoral/tata-ethical-fund
Tauras Ethical Fund: https://www.taurusmutualfund.com/OurSchemes/taurus_ethical_fund.html