Sabtu, 30 Januari 2010

Shariah Compliant Mutual Funds

Shariah Compliant Mutual Funds

Here are few facts about Islamic Investment Opportunities in India.

There are two ways of getting profit in Islam

(1) which Islam permits (2) which Islam prohibits.

Islam has forbidden earning from interests. And has counted as big sin and among the big sins there is no which forbidden in this manner; that notice a war from Allah and his messenger. Can human being defeat Allah and his messenger?

In India Muslims are second largest population after Indonesia, Indian Muslims population estimated to be around 150, millions. Inspite of this India is routinely ignored in the vast majority of the books articles on the subject of Islamic banking and or investments.

Dow Jones has Islamic index, FTSE of Britain has not only Islamic Index but also a full fledge Islamic bank, but unfortunately there is not a single Islamic Product or an Islamic benchmark in Indian investment environment.

Even more bizarre India is not covered and not included for any of their research work by any Islamic institution or bank .although India is the big market for Islamic investments,and according to me no research work of any research institution could be complete without including India.

Although India has a good Islamic structure which provides opportunity of riba free investment and finance which gives us lots of benefit.

Yes, India is the second largest population of Muslims in the world after Indonesia. It is 150 Million and still we don’t have any Islamic Index. Dow Jones has Islamic Index.

Shariah Compliant Investments.

Here are the Shariah Compliant Investment Criterias.

(a)The company’s activities should not include liquor, pork, hotel, casino, gambling, cinema, music, interest bearing financial institutions, conventional insurance companies, etc.

(b) The total interest bearing debt of the company at any point in time should remain  below one third of its average market capitalization during the last twelve months.

(c) Its aggregate of account receivables should remain below 45% of total assets.

(d) If company has any interest bearing income it should not be more than 10% in any condition.

Thus, According to the Islamic religion, you can not invest in Debt Mutual Funds. Because Islam has forbidden earning from Interest.

Another opportunity is mutual fund which is based on 100% equity. These funds are invested in different sectors like IT, automobile telecommunication, cement and a few present in interest based financial institutes, almost 10 to 15 %.

So investor has to purify that amount from the profits. And also there are many sectorial funds which
invests only in a particular sector like automobile,Oil & Gas, etc

Thus, Sector Funds are the Best Funds as they Invest in particular sector companies so they fulfill the Shariah Compliant Criterias.

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