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IslamiCity > Business & Finance > IC Finance > Mutual Funds
 Welcome to IC Finance Information & Services

 O ye who believe! Devour not usury, doubled and multiplied; but fear Allah.
that ye may (really) prosper. Qur'an 3:130 (Arabic) - Recite  


Mutual Funds


Mutual Funds are groups of stocks and other investment instruments (Bonds, Certificate of deposits, ...etc.) managed by a "professional" and pooling money from thousands of investors and leveraging the aggregated amount of the pooled money in buying stocks and bonds.

Types of Mutual Funds
Any Mutual Fund falls roughly into one of two categories (as below). Before you invest in a fund, you have to know which type it is, and whether that type is suitable for your goals:
  • Income Funds
    These aim to provide the investor with a regular income (monthly/quarterly) by investing in securities that provide income (e.g. dividend paying stocks, ...etc.). The appreciation of capital is of secondary importance (if at all).
  • Growth Funds
    The main aim of this type of fund is to grow the capital invested by appreciation of the undelying securities, and not to provide any annual/quartely income.
Advantages of Mutual Funds
The ideas behind Mutual Funds is very good indeed.
  • Spread the risk by diversifying the portfolio. If one instrument (e.g. Stocks) or sector (e.g. Transportation) falters, then the hit to the overall portfolio is minimal.
Disadvantages of Mutual Funds
Despite their perceived benefits, Mutual Funds have several drawbacks.
  • Can incur huge costs in fees and commissions, unless you are buying a No-Load Mutual Fund.
  • Historically, they have under performed the stock market. The best strategy (for a non-Muslim) is to buy an Index Fund (one that tracks a major market index, such as the Dow Jones Industrial Average - DJIA or the Standard and Poor 500 -S&P 500.
  • You have no say in where your money is being invested. Some Islamicaly prohibited investments can be made without your knowledge. (Banks, Tobacco, ...etc.)

In addition to all the above, even if a fund starts out with all Islamicaly Correct® components (very rare), the managers of the fund reserve the right to (and often do) change the fund components over time, as a response to market changes.

  • Dow Jones Islamic Fund 
  • Azzad Funds
    The Azzad Family of Halal Funds consists of two mutual funds and two private investment funds. A professional team of experienced portfolio managers incorporates Shari’ah-based criteria as they try to identify promising securities for the Azzad portfolios. They include: 

·     Azzad/Dow Jones Ethical Market Fund, an enhanced index fund based on the extra liquid version (IMXL) of the Dow Jones Islamic Market Index (DJIMX)

·     Azzad Income Fund, invests in equity income securities.

·     Azzad’s private investment funds, the Azzad Growth Funds, are available to accredited investors and invest in small-cap stocks. 

Azzad offers several retirement savings accounts and college savings plans. In addition, investors can meet with a representative to learn how the Azzad Funds can supplement their investment portfolios by calling 866-862-9923, www.azzadfund.com. 

  • Amana Mutual Funds Trust
    They offer two Mutual Funds (Growth and Income) operating according to Islamic Principles, with an Islamic Advisory Board.
    On their web site, you will find:
    You can check their current price and last daily change, with links to further analysis:
    • Amana Income Fund: AMANX
    • Amana Growth Fund: AMAGX
       
  • Wright Islamic Equity Investment
    Their objective is to "provide competitive Shari'ah compliant investment returns utilizing a globally diversified portfolio of high quality equity investments rigorously screened for Shari'ah compliance. The minimum account size is 500,000$, so they are geared more towards institutional investors or Very High Net worth individuals. They follow the Dow Jones Islamic Market Index principles and Sharia rules.
     
  • Halal Mutual Investment Company
    Is a Bermuda company, but based in U.K.
     
  • Miraj Global Equity Funds
    Based in Montreal, Quebec, Canada, with representatives in Dubai, U.A.E, and Jeddah, Saudi Arabia.
  • Failaka Investments Inc.
    Used to operate a Mutual Fund like arrangement, but have recasted themselves as Islamic Equity Researches.
 
Islamic Mutual Fund Monitoring
In the U.S.A, Morning Star publishes performance data of the various Mutual Funds that are available for investors in the U.S.A. Their data is available on most investment sites such as Quicken.

Failaka is a a Chicago, Illinois, U.S.A. company with an office in Kuwait. They monitors the performance of many Islamic Mutual Funds worldwide.
You can check:

Data for 1998 is also available, so you can check it if you are interested in comparing year-to-year performance.
Other Social / Ethical Funds

You can also, further look into the Ethical / Social Funds which often have very good ethical causes, but most often would invest in Islamicaly prohibited components.

These include:

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