I’ve been regularly investing in a global index fund with over 2000+ companies in it’s holdings. I just learnt that some companies in the fund are non-shariah compliant. I found hadith saying that the majority of a thing should be considered as the whole, so is it permissable to keep investing in this fund if most companies are shariah compliant and then donate yearly a % of the gains as purification? Or should I get out of that fund completely?
If I should get out of the fund, how much % of the total profit should I purify? It’s difficult for me to estimate as I don’t know how many of the companies are not shariah-compliant and if they’ve contributed to the funds price to increase.
I would appreciate any advice and help on this matter.
The problem with a fund that is not certified as Shariah compliant is they beyond just it’s holdings and asset classes, the investment strategy and trading activities of the fund manager should meet Shariah principles too.
In your scenario, if it was an equity only fund, you would still consider the 5% rule. The total impermissible income can be maximum 5% before the fund becomes non-compliant.
If I was investing/trading, for example the Nasdaq100 index fund, I know there are some companies in Nasdaq100 which are impermissible. (I’ve checked every company within nasdaq100 and a small number of them are impermissible)
Can I purify my nasdaq100 profits by calculating and donating the haram part of the profits based on the weighting of the impermissible companies within nasdaq100?
For example, American Electric Power is impermissible and has a weighting of 0.44% within the Nasdaq100 so I would donate that 0.44% profit of AEP to charity, in order to cleanse my profits. Is this allowed?