Shariah compliant mutual funds in India

Taqwaa Advisory And Shariah Investment Solutions (TASIS) has approved only two Sharia-compliant mutual funds in India: Tata Ethical Fund and Taurus Ethical Fund.

The schemes will invest in only securities which are Shariah compliant and follow principles of Shariah in the selection of portfolio stocks it is dealing for investors keen to invest in a diversified equity fund without banking and finance exposure or any business, sector which is prohibited in Islam. Besides these two, Reliance Shariah Bees ETF is also considered as Sharia compliant ETF.

Below are the main highlights of two Shariah compliant mutual funds which are available in the Indian Financial Market.

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Tata Ethical Fund is an open-ended equity fund which invests in a diversified equity portfolio based on principles of Shariah. TATA AMC is a part of one of the most trusted and valued brands in India; Tata Mutual Fund has earned the trust of lakhs of investors with its consistent performance and best in class services.

Tata Mutual Fund offers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, etc. Tata Asset Management Limited (TAM) is the Investment Manager to Tata Mutual Fund.

 However, we need to be cautious that past performance of a mutual fund is not a guarantee of future results, but if you know how to analyse fund performance you can maximize returns simply it shows the historical returns over some time.

Ethical Mutual fund is a most recommendable Shariah based investment only for long-term perspective; as equity market is always volatile for short term.  However, ethical fund is managed by professional fund managers and mutual fund industry is well regulated by SEBI (Security Exchange Board of India).

It is a fund of diversified quality shares, and liquidity is always available means investor can exit any time as partly, fully amount subject to the market price. For small saving one can invest for the long term through SIP (Systematic Investment Plan) as little as minimum Rs 500 per month without any hidden costs.

Irshad Mushtaq is the founder of MI Securities and business partner of Sharekhan in Srinagar