Opportunities of Shari’ah Mutual Funds

Shari’ah mutual funds provide similar opportunities compared to conventional mutual funds, The majority of the respondents expressed their view positively. According to them, Shari’ah mutual funds have similar features and provide the same opportunities. Two interviewees expressed that Shari’ah mutual funds are governed by main sources of Shari’ah law and regulations. In this context, “Shari’ah mutual funds have certain restrictions resulting from compliance with Shari’ah tenets”. However, “a large segment of the economy still remains within the reach of Shari’ah compliant investment”. 

The two respondents highlighted that, “certain restrictions make such funds more sustainable and less vulnerable due to the fact that Shari’ah disapproves investment in sectors such as tobacco, alcohol, gambling, pornography, speculation, uncertainty, and other non-Shari’ah compliant financial instruments and investments”. 

Both respondents tend to disagree with the question asked. According to one respondent, there is no comparison between both funds as they both have their own advantages and disadvantages and this all depends on the market. The other respondent added that Shari’ah mutual funds have a diversification feature, but in the Indian contexts such restrictions due to Shari’ah compliance limits the opportunities. For instance, Shari’ah mutual funds cannot be invested in financial instruments as they are deemed non-Shari’ah compliant in over the worlds.

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