I am new to the Zoya community and sorry if someone has already asked this question in a prior thread.
When it comes to ETFs, is there any ruling on what percentage of stocks can be Sharia non-compliant? For example, sharia compliant ETFs such as SPUS and HLAL have 2.5% and 10% Sharia non-compliant securities, respectively, based on the Zoya app. My understanding is that we will have to purify our dividends at the end of the year at this rate. However, let’s say someone owned an ETF such as VTI or mutual fund like FXAIX which has 30% of securities that are Sharia non-compliant. Would it still be permissible to purchase this ETF/MF and then pay a higher purification rate at the end of the year?
Unlike stocks, there’s no fatwa as far as we know. @saad elaborates below. Beyond that I don’t know if SPUS and HLAL carrying an amount that isn’t shariah compliant is a part of their design or if they have different standards for shariah compliance. I’m inclined to think it’s the later. My guess.
We cover purification in more detail in our FAQ, check out the link below
Again these steps are for holding a stock that fails shariah compliance and note for a fund, which might contain many. The FAQ also covers that the reason a company fails shariah compliance, whether it was due to a business or financial reason, will change the steps regarding to purification.
We’ve plans to provide a tool to solve this problem in the app, a part of our very ambitious roadmap, but I’m curious how other Zoyans are treating this question.
How are do people approach purification for funds?