Salam aleykoum,
I bought the MSCI Islamic USA ETF of Blackrock (ishares). I would like to know if the dividend paid is already purified or if we should purify it when we receive it?
Allah y jazikoum for your answer
Salam Alaykum warahmatu Allah,
If a company derives part of its total income from interest income and/or from prohibited activities, then this proportion must be deducted from the dividends paid out to shareholders and given to charity. The MSCI Islamic Indices reflect the total return of an Islamic portfolio where re-invested dividends have been “purified”. This is conducted by applying a “dividend adjustment factor” to all reinvested dividends. Investors in the iShares Islamic ETFs are responsible for ensuring the purification of dividends received from such funds where such dividends have accrued prohibited income. Pure and impure dividend amounts reported to investors are based on MSCI’s calculation to ensure consistency with the benchmark and BlackRock is not responsible for MSCI’s calculation of the pure and impure dividend amount.
Purification Data - https://www.ishares.com/ch/professionals/en/products/251393/#/
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May Allah reward you for your answer!
So I understand that the dividend are already purified. My English is not good enough to be sure of my understanding, could you please confirm ?
No, you need to purify them yourself.
There is a table on their website that shows the amount you need to purify per unit of the ETF you own
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If you buy the HSBC Islamic Funds, they do the purification for you. With Ishares you need to do it
HIUS is the ticker for US
HIWS for global
They have others.
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To provide a comprehensive picture, HSBC Islamic Funds and ETFs are accumulative in nature, meaning they do not distribute dividends. In contrast, iShares Islamic ETFs are distributive in nature, with dividends distributed every six months.
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As-salamu Alaykum,
I would highly recommend to take a look at their holdings and see if they do the purification themselves.
From personal experience, HSBC Islamic funds provide dividends but do purification within the fund as well.
This was identified from their holdings list and prospectus sheets.
Jazakhalla khairan,
Maheen