I was wondering if I could invest in conventional multi asset funds (such as those offered by Vanguard) that I have assesed as having only small haram elements (bonds, cash interest, forbidden companies) as a percentage of the overall fund and then purifying this investment myself by giving away the gains from these elements? Is it permissible? Is it practical or just too complex?
Also, looking at some of the funds offered by Vanguard can any of them be halal even though they have not been named as Islamic, Sharia etc. and have not gone through a compliance process? (At least not those offered in the UK, unfortunately).
Can I as a non finance expert screen funds for compliance or is it just too complex, especially when compared to shares? Would this screening have to be regular depending on what the fund invests in and the weightings given to each investment?
There are several concerns from a Shariah compliance perspective in investing in funds which do not have a Shariah board or have not been screened by experts. For example, multi asset funds will have equities, are all the constituent companies Shariah compliant? Multi asset funds will give you exposure to commodities like gold and oil, but most likely they will be done through CFDs or future contracts. That’s not to say all funds use CFDs and future contracts, ETFs give you ownership interest in commodities as they are structured as trusts in most cases. Further, in multi asset funds, are the fund managers short selling? Leveraging? To add to all of that, bonds and fixed income instruments are common place in such funds to create a diversified portfolio and reduce risk exposure.
Therefore, I would strongly encourage investing in Shariah complaint funds.
Asalamualykum mufti saab, hope your well, my question was regarding investing in oil shares.
From what i understand Oil is a commodity which is anything that is a raw material or agricultural product that can be bought and sold
The commodity is not traded like physical holdings but is based on *contracts for a particular duration of time.*These contracts have some defined standards like future price, time duration, and quantity and these trading positions are contracts that are valid only for a particular period of time. Beyond which they expire and are worthless buying a stock of a business is buying equity in a company so like if you buy google You’re buying equity but here it seems like gambling no?
May Allah bless you.
I cannot give a general ruling, but yes, there are certain contracts involving commodities, that are not shariah compliant, for example, futures, options etc.
Obviously, there might be shariah compliant alternatives with companies trying to mimic some of these conventional contracts within the parameters of shariah.