[Request 👋] Shariah compliant etfs

Can we please have some Islamic etfs like the ishares for the Muslim community?
Like the ishares MSCI world islamic.

Out of interest, what does that entail? Is it just interest bearing lending? Then you might get away cheaper with explicit non-bank or non-financial institution etfs.

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It eliminates companies that deal mainly with tobacco, alcohol, adult movies, banks (as they do interest ), companies that bear a lot of interest and etc.

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It might be best to put some specific ETFs up for vote. Good idea though.

Few available on AJ Bell you invest as above

Thanks, will see

Learned something new today. I didn’t know a thing like shariah bankin compliance exists.

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An emerging and potentially huge market.

I don’t get shariah compliant ETF’s, all companies use some form of interest debt. If an employee has a company credit card that would be non-compliance right? Don’t really know who there could even be. Maybe on ME exchanges but for UK and US highly doubtful. And an ETF as well…are you going to personally vet each company and the criteria. Marketing scheme in my opinion

Could be wrong but seems like a total pander and a farce to me. Are TER’s shariah compliant

As I understand it’s above a certain percentage above which they are considered non compliant. Also they don’t invest in things like gambling etc.

I see so gambling, porn, bacon, banks, alcohol etc are non-compliance but they overlook the actual businesses’ activities. Not sharia compliant but they do it by sectors that they don’t want to invest in. Just seems to me to still be a marketing ploy. It’s either shariah compliant or its not and this seems to me like it doesn’t make a difference only for the sectors.

Music is also seen as haram by certain sects in Islam are these excluded? Have a feeling dating apps might be excluded i.e Match

The companies are looked into and if the company deals more than 5% in revenue from prohibited areas like alchol they are eliminated. But this could change due to different factors. Even if it was done by sectors it still eliminates big companies that are prohibited.

RIBA (interest) is haram therefore it’s a load of bollocks. And you said less than 5%. All or nothing…marketing to Muslims in my opinion and nothing is shariah compliant

I can see where your coming from, but there is more than meets the eye…

It does feel like a marketing thing. Getting a bunch of scholars together to decide the boundaries for shariah compliant financial instruments which are more complex than envisaged a century ago, let alone 14 centuries… It comes down to interpretation.

Although, from friends and family who look for shariah options for things such as mortgages, it gives them comfort that they have taken the word of another Muslim to enter into the transaction. Just as a Muslim would check with the Muslim person selling meat to them that it is halal… Responsibility stops there. If it is taken in good faith but turns out it was not halal, you wouldn’t be to blame.

But coming back to the request: I do think there option would be good to have, to cater to a lot of people who would want to have etfs themselves, but don’t want to always look at underlying assets too much, it opens the options to them.

Plus from the performances of shariah compliant funds that I’ve seen, they actually perform really well, usually in the top performing funds for the managers. Maybe the “restrictive” shariah guidelines actually highlight the sensible companies to have in your portfolio.

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There’s a degree of hypocrisy in all religion, and if this veneer of marketing allows a new audience to ignore that hypocrisy and to access broad based investments, I’m all for it.

I have a sharia savings accoun. It doesn’t pay an interest rate, it pays a “profit rate”. But it clearly just is interest, it’s taxed as such and not as a dividend. I looked at its mortgages to satisfy my curiosity, and it’s engineered to work exactly like a mortgage, but with some legalese meaning that the bank is making a profit on the property itself, and not in the lending of the money.

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There is marketing, but there is also ability to get a different angle of the market. As it is effectively a different definition of SRI.

I.e. Dow Jones Islamic Market Index which I hold via HSBC fund in my pension is “nice”.

The first level of DJIM screening removes companies involved in such products alcohol, pork-related products, conventional financial services, (e.g. banks) and insurance companies), entertainment) (e.g. hotels, casinos, gambling etc.), tobacco, and weapons and defense. A second level of DJIM screening based on financial ratios, is intended to remove companies based on debt and interest income levels in their balance sheets. (From Wikipedia)

Many properties of such screening match my outlooks, I am not religious but I am against tabacco, alcohol, gambling, weapons as all of those things are harmful to people and I do not wish to profit from any of that. And anti-pork, is semi pro-vegan :seedling:. The rest is a mixed bag. It still holds oil & gas companies, which I offset by investing into £TRIG, and not all financial companies are bad. I have stocks & bonds of financial companies that I think are good.

So it works for me, as it is a good long term thesis. It has been underperforming the market, and probably will continue to do so and I am ok with that.

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