SHARIA MUTUAL FUNDS

Abstract

Investment activities in Sharia mutual funds are permissible because they do not contradict Islamic principles. In principle, mutual funds not only provide investment opportunities but also offer various types of investment instruments that can be developed. Mutual funds serve as an alternative investment for the public and provide opportunities to obtain better investment returns over a certain period. Sharia mutual funds do not invest in shares or bonds issued by companies whose business activities, management practices, or products are contrary to Islamic principles, such as manufacturers of alcoholic food and beverages, pork products, cigarettes and tobacco, conventional financial services, defense and weapons industries, and entertainment businesses associated with immoral activities. The fundamental difference between conventional mutual funds and Sharia mutual funds lies in the implementation of screening and cleansing processes.