Mutual Funds

Mutual funds are a special form of partnership established exclusively to deal in financial markets, mostly buying and selling stocks, future commodities and/or sharing a money market account. Buying units of a stock – trading mutual fund – assuming that all stocks it deals with are within the limits of Shariah, i.e., we exclude funds that deal with stocks that do not fulfill the criteria set by contemporary scholars of stocks that a Muslim may trade/own – is itself setting these savings (money) as principal in this partnership. By this very act one becomes a merchant or trader in stocks from the Shariah point of view. And a merchant is subject to Zakat if other conditions of Zakat (unconditional ownership, hawl, Nisab, excess above debts and basic consumption needs) are satisfied. Whether the source of this principal in the mutual fund partnership is savings, inheritance, gift, etc., is immaterial to the Zakat-ability. Zakat rate is 2.5% of the net asset value on the due date.

To read more about detailed information on Zakat, click here…