Does anyone know how the purification works?. because it seems like almost all the dividends for this etf goes to purification
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Say a company has 2% of its revenue from non permissible sources and it pays a dividend. 2% of the dividend should be given to charity as per scholars to purify the income.
that means entire dividend from a stock or etf should not be required to be purified. Where are you getting that metric/ statistic from?
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The dividend purification factor is calculated as:
total non-permissible revenue (including interest income) / total revenue
For example, let’s say Meow Inc. had total revenues of $100 million in 2020 where $4 million of that was from shariah impermissible sources.
4 / 100 = 0.04
If they paid you $200 in dividends that year, you can calculate the purification amount by multiplying the purification factor to the total amount of dividend income earned:
0.04 x $200 = $8
SPUS has a purification calculator available on their website here whereas HLAL makes their purification numbers available quarterly in a spreadsheet on their website here.
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Thank you for clarifying
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Salam @saad and everyone!
The SPUS calculator does it for the dividends purification.
How about “capital gains “ made on holding that ETF for long time. What should be the process there?
Purification is not required on capital gains only on Dividends.
Where’s the evidence for that