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Published on Feb 4, 2019
TRANSCRIPT:
WHAT ARE SHARIAH COMPLIANT FUNDS?
Hi everyone lets talk about an interesting mutual fund category, these are known as Shariah compliant funds or shariah funds as many call it.
Shariah is actually a moral code or a law of Islam a part of which talks a lot about the kind of industries into which an Islamic investor can invest into, so shariah law states that there are a few businesses into which a person following Islam as a religion should refrain from investing into, any industry:
- Involved in lending of money and taking interest in return for example banking institutions.
- It should exclude any industry that trades and transacts in alcohol, gambling or tobacco aswell.
- And similarly there are many such exclusions so this fund actually ensures that these exclusions and these do’s and dont’s are not just followed in the letter but also in the spirit for the sake of the investors who follow Islam Religion, to give them an equivalent opportunity to participate in the equity growth story.
Now for this what they do is they hire so fund houses, the fund management team hire an actual shariah advisor on the board of the fund management team who then ensures that the investments of the people go into certain sectors and companies which are by far shariah compliant, in case of any sector where in lets say there is a debt component where in an interest component is recognised, there is separate purification process to take that component out and then pass on the clean or shariah compliant profits back to the investor.
so although this is a specific kind of a category the thought and the rational behind it actually reflects the opportunity that the Indian Mutual fund industry offers to everyone in the country.
RECOMMENDED SHARIAH FUND
Within the universe of shariah compliant funds, while there are only 2 funds within the shariah compliant category.
one is TATA ethical and one is Taurus Ethical, we would any day choose TATA ethical as the best shariah fund available, the reasons are:
- Its bottoms up stock picking skills.
- Its portfolio diversification.
- The limited concentration that the portfolio has,
- The universe into which the fund operates contains of almost 200 stocks spread across 29 sectors and stock picking from such a shariah compliant universe actually makes TATA ethical fund is the best shariah compliant investment option in the equity space today.
HOW TO INVEST IN TATA ETHICAL FUND?
The best way to invest into TATA ethical fund is through the Fisdom app, all you need to do is open your Fisdom app click on top mutual funds just type in TATA ethical fund and you’ll be investing in less than 2 minutes.
so guys as I always say the best time to invest is right now and the best way to do it is through FinityWealth.
