Salamo Alykom everyone
I am new to this world and I was pushed into it because of my 401k which introduces me to all sorts of confusions and uncertainty about my money.
is ETF Halal or Haram? and if its concept is haram why there is halal ETFs there like Amana and Wahed?
sorry if my question looks impolite but I read some article that talks about ETF as a concept and I understood it is haram but then I was surprized there is halal ETFs like Amanna. To make the picture more clear, it is like some scholar says pork is haram then someone says claims it is halal since it was Zabiha.
JAK in advance for your answer. Thanks
Wa Alaykum Salam Wa Rahmaa Tu’lahi Wa Brakatu,
ETF is an Exchange Traded Fund
A fund typically consists of a few assets, such as stocks, cash, bonds etc.
These can vary from theme to theme, provider to provider.
They are packed up and sold on a stock market for people to use.
For example, company A put 100 companies together and put it’s on the New York Stock Exchange which allows John and Ali to buy it and trade with it.
In practice, the use of an ETF is halal and so is the creation and handling of one.
Again, in essence, an ETF is basically a package of companies.
Why would an ETF be haram? Because it contains non-compliant stocks such as banks and alcohol
A halal certified ETF is usually an ETF offering without any haram assets, no interest bearing debentures, haram companies, etc.
The certification may also very as there are 5 standards for compliancy, some are sticker than others.
In summary:
An ETF in principle is halal, it is a package of assets
It is haram if the assets are non compliant
It is halal certified if a shariah regulations body has checked and has said it is okay
insha’Allah this is useful.
As-salamu Alaykum.
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Thanks a lot for the answer, I have based on your answer a follow up questions
as you mentioned for an ETF. stock, etc to be halal for traders there should be some certification from some institution of some scholars. Can you recommend some of these institutions, scholars, etc that I can follow for these matters, please?
Jazakom Allaho Khairan
As-salam,
No idea.
Most halal ETFs have a shari’ah committee creating those funds.
Whereas other opt for having an external auditor.
Stocks themselves will more than like never be halal certified because of logistical reasons.
It is possible but I haven’t seen it implemented.
You’ll have to do your own due diligence as I’m not knowledgeable enough in the matter.
Jazakhalla khairan and BarakAllah Feek for your efforts.
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