As Salam Aleykum,
I saw this ETF which looks good and is promoted as a halal ETF. However the first company in the list is Shariah Non-Complaint (RELIANCE INDUSTRIES ORD A)
Is it possible for an ETF to have Shariah non-complaint stocks and still be classified as halal/shariah complaint?
JazakAllah
Shajee
Walekum Salaam,
I am new to stocks as well and from my reading about Shariah compliance, it is possible to have an ETF that is Shariah Compliant as long as the non-Shariah holdings are less than 5%. From my understanding, you would purify the dividends by the total percentage of non-shariah holdings. Hope this makes sense.
Someone please correct me if I am wrong
Jazakallah
Which ETF are you referring to?
Generally speaking, if an ETF has been reviewed and certified by a shariah board, you should be safe. In other cases, some people will apply the 5% rule as @Agentkhan noted. One example of this is the VanEck Semiconductor ETF (SMH).
@saad I was referring to this ETF
If you see in the holding the first company that appears is Reliance Industries which not shariah complaint. However the ETF itself is promoted as Islamic ETF