Tata Ethical Fund
The investment objective of the Scheme is to provide medium to long-term capital gains by investing in Shariah compliant equity and equity related instruments of well-researched value and growth-oriented companies.
What is Shariah Law
Islamic law (shariah) prohibits a variety of activities:
Riba (Prohibition of Interest ) : Paying or charging interest. “All forms of interest are riba and hence prohibited”. Islamic rules on transactions (known as Fiqh al-muamalat ) have been created to prevent use of interest.
Haraam : Investing in businesses involved in activities that are forbidden (haraam). These include things such as selling alcohol or Pork, or producing media such as gossip columns or pornography
Murabahah : Charging extra for late payment. This applies to murabahah or other fixed payment financing transactions, although some authors believe late fees may be charged if they are donated to charity, or if the buyer has “deliberately refused” to make a payment.
Maisir: This is usually translated as “gambling” but used to mean “speculation” in Islamic finance. Involvement in contracts where the ownership of a good depends on the occurrence of a predetermined, uncertain event in the future is maisir and forbidden in Islamic finance.
Gharar: Gharar is usually translated as “uncertainty” or “ambiguity”. Bans on both maisir and gharartend to rule out derivatives, options and futures. Islamic finance supporters believe these involve excessive risk and may foster uncertainty and fraudulent behavior such as are found in derivative instruments used by conventional banking.
Engaging in transactions lacking “`material finality`. All transactions must be “directly linked to a real underlying economic transaction”, which generally excludes “options and most other derivatives”.
Tata Ethical Fund
Objective Tata Ethical Fund is an open ended equity Mutual Fund fund which invests in a diversified equity portfolio based on principles of Shariah. The investment objective of the scheme is to provide medium to long-term capital gains by investing in Shariah compliant equity and equity-related instruments of well-researched value and growth-oriented companies.
Who Should Invest
Ideal for Investors:
Keen to invest in companies which are from Shariah compliant universe of stocks
Key Attributes:
o Investments in well-researched value and growth oriented companies from Shariah compliant sectors
o Avoids investments in companies involved in activities like alcoholic beverages, gaming/casinos, non halal food products and conventional financial institutional based on Riba (interest)
o Avoids companies with higher debt to equity ratios and thereby invests in low leverage companies
o Purification of any prohibited income on yearly basis as advised by Shariah advisor
Asset Allocation
Equity & Equity Related instruments of Shariah compliant companies (80-100%)
Other Shariah compliant instruments including Cash (0-20%)
Tata Ethical Fund has Certificate from Taqwaa Advisory and Shariah Investment Solutions for Compliance of Shariah law …Click the link for Certificate
“Mutual Fund Investments are subject to market risk, read all scheme related documents carefully”