what is Islamic mutual fund: the contracts, screening, structures and purification mechanisms.
Salaam and welcome, @434749abu! Can you please clarify your question?
I think he wants to know the details & how it works… I do too.
Mutual funds are a type of investment fund where multiple investors pool their money together to purchase stocks and/or other securities. They are professionally managed, meaning that a fund manager does all the work of buying/selling/diversifying/rebalancing/etc. In exchange, they charge you an annual management fee (also known as “expense ratio”) in the form of a percentage of your investment.
In other words, as a mutual fund investor, you own shares in a company whose business is buying shares in other companies. You don’t directly own the stock in the companies that the fund purchases, but you do share equally in the profits or losses of the fund’s total holdings—hence the “mutual” in mutual funds.
Islamic mutual funds work in the same exact way with the only difference being that the stocks they invest in through the fund must be shariah compliant.
Thx a lot. So are there any options in UK? I know rayan bank offers options but to open an account with them I need a British citizenship. Currently, I don’t have that which makes it difficult for us to hunt for mutual fund options in UK.
I heard about vanguard but I’m sure it’s not sharia compliant.
Thank you very much and is there any difference between unit trust and mutual fund.
Vanguard has many good investment products such as low cost index funds, mutual funds, ETFs. Doubt any of them are Shariah compliant or at least not marketed that way.
In the UK, there are 3 ETFs from iShares. You should also be able to invest in the US listed ETFs. and finally there are active managers (such as myself among others) who can manage an account for you.