Most-asked question
Are unit trusts, ETFs and Sharia funds permissible?
12 fatawa in the archive answer questions on this, from 4 South African Darul Iftas (Mufti Online, AskImam, Azaadville, Ibn Masood). Below, each Darul Ifta’s answer is quoted word for word from the opening of one of its fatawa.
Based on the fatawa linked below. Please read the sources and double-check with a Darul Ifta for your situation.
Consult a mufti for your situation. Fatawa SA is a read-only archive and issues no rulings of its own.
What the Darul Iftas say
The Ulama differ. At least one of the fatawa quoted below says there is a difference of opinion on this question. Read the answers in full, and see how each Darul Ifta answers.
“1. Assuming that the unit trust is Shariah compliant, Zakaat is payable on the current market value of the Zakaatable assets only. It will therefore be correct for you to deduct non-Zakaatable assets before calculating your Zakaat.”
“ETF (exchange-traded fund) is a type of investment fund and exchange-traded product, i.e., they are traded on stock exchanges.”
“ETF-funds trade in the stock exchange market. Contemporary scholars have differences of opinion on the Sharī’ah Compliancy of buying and selling shares in a company or joint stock exchange markets.”
“We do not know all the workings of a unit trust, where they invest and how they invest. These details are not before us. If they are investing in right avenues and their operations do not contradict the Shari`ah then it is permissible.”
Quotes are the opening words of each answer as published; the full answer, its conditions and references are on the fatwa page. Answers depend on the exact details of each question.
Read the fatawa
- Zakaat on unit trusts Ibn Masood · 28 Mar 2022
- ETF and Option Trading Azaadville · 26 Jun 2021
- Is it permissible to purchase commodity ETF (Exchange traded funds) and leveraged ETF AskImam · 17 Sep 2018
- Shariah Compliant Equities, Shares, Unit Trusts, Islamic Banking etc. Mufti Online · 7 Oct 2012
- ETF Pension Funds AskImam · 9 Jan 2014
- Unit trust shares Mufti Online · 11 Oct 2017
- Are unit trusts permissible? Can the profits be used? AskImam · 10 Sep 2002
- Zakaat on unit trust investments Mufti Online · 2 Jun 2015
- When valuing shares in a property unit trust is it acceptable to revalue the properties and sell the shares at a higher price even though the profits have not being recognised? AskImam · 13 Sep 2000
- Investing in unit trusts Mufti Online · 5 Feb 2014
- Old mutual and oasis unit trust Mufti Online · 5 Dec 2013
- Unit Trust Mufti Online · 21 Sep 2013
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