Islamic Investment Funds:

Islamic funds or Shariah Compliant funds refers to a joint pool, where investors contribute their surplus money, to invest and earn Ha-laal profits. Subscribers of Islamic investment funds and Islamic mutual funds receive a document which certifying their subscription. This document may be called “Certification”, “Share” or “Unit”, and in Islamic Shariah, its validity is always subject to following two conditions:

First Condition:

Subscribers should clearly understand that the returns are tied up with the sharing of actual profit or loss. However, if the losses are due to the negligence of management then they are not liable to compensate it.

Second Condition:

Funds must be invested in Shariah compliant business. And all channels of investment, as well as the business terms must conform to the Shariah principles.

Islamic investment funds

Islamic Mutual Funds:

In Islamic Equity Funds or Islamic Mutual funds, investment is made in shares of joint stock companies, and profits are earned through capital gains in the share value, and the dividends is distributed by those companies.

Dealing in the shares of the Islamic equity funds is acceptable in Shariah under the following two condition:

  • Nature of Business of that Company must be Shariah compliant (such as: Construction or Export of Halal Meat), and,
  • Company is not involved in prohibited elements or activities (such as: Riba or Gambling).

Ijarah Funds:

The Ijarah funds are based on the concept of Ijarah. Subscription amount is used to purchase assets, such as Real Estate, Vehicle or Machinery, and they are leased out to users. The Ijarah funds own the assets, and rentals are the profit of the subscribers.

Commodities Funds:

The Islamic Commodity Funds are based on commodities, and the subscription amount is used to purchase different commodities, for resale. Profit generated by the resale is considered as the income, and it is distributed among the subscribers of funds.

Murabahah Funds:

In the Murabahah funds, Islamic banks purchase assets to benefit their clients, and sell it to them on deferred payment, and an agreed profit is added to the cost. The Murabaha funds are Closed-End Funds, and due to the nature of Murabahah, their units cannot be negotiated in secondary the market.

Mixed Islamic Funds:

In the Mixed Islamic Funds, the subscription amount is employed in different types of investments, such as, such as Equities, Leasing, Commodities, etc. The share of mixed Islamic funds is negotiable in the market, only if the tangible assets of the fund are 51% or more, while the liquidity and debts are 49% or less.

Management of Islamic Funds:

The Islamic funds may be managed through one of the following two ways:

Management of Islamic Funds as Mudharib:

If managers of Shairah compliant funds act as Mudharib for the subscribers, they are rewarded by certain percentage of annual profit. The management gets its share only if the Islamic funds earn profits, and they get nothing otherwise.

Management of Islamic Funds as Agent:

If managers of Islamic funds acts as an Agent of subscribers, they are rewarded by pre-agreed fee for these services, which may be paid lump sum or on monthly basis.

Investing in Shariah Compliant Funds:

When you want to invest your money in an Islamic way, all you have to do is to figure out the right Islamic investment options, that will suit your needs. While there are many challenges to overcome, the reality is rather simple. By investing in Islamic funds, you help the Islamic community grow and truly speaking, it probably a good way to achieve such a result. Islamic investment funds and Islamic mutual funds allow you to invest in dedicated companies in the Islamic world that actually need those funds needed to survive.

How Islamic Funds are Different from Conventional Funds?

Conventional mutual funds and the investment funds tend to be focused on just about any type of investment. You don’t have any particular things that will stop you. The idea is that you can invest in anything you want and get the profits fast and easy. It sounds great, but if you want to help the local community, this will not be for you. This is why the Islamic investment funds and the Islamic mutual funds are very popular. They can help you get the right value and experience all the time, which in the end will work to your own advantage. Definitely worth your time and the outcome can be a very good one. Plus, the great thing is that you can invest in the local community and help Islamic companies grow. This is very important, because there are many companies which are in dire need of help and you are the best one to provide that help to them at all times!

Why the Demand of Islamic Funds is Growing?

As you know, there are many Islamic communities all over the globe. With help from this type of investment funds, you get to eliminate the hassle and focus on what really matters. You have the unique opportunity to deliver the financial influx that Islamic companies need. All you need to do is to access the Shariah compliant investment funds and the Shariah compliant mutual funds. Do that, focus on results and the experience can be second to none for sure!

Should You Consider Investing in Shariah Compliant Funds?

So, don’t hesitate and start investing in the Islamic investment funds as fast as possible. Just consider that, focus on value and you will be able to help the local community grow very fast. This is very important and it provides you with a great set of benefits in this regard. If you want to learn more about Islamic banking and financial system, you may choose to study mba Islamic banking and Islamic banking diploma – they are internationally recognized professional development programs. These program comprises of well-structured Islamic finance course and Islamic banking courses.

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