Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
Investing through Awaed can generally be permissible when the platform follows recognized Shariah standards and uses qualified Shariah oversight. Stocks with a purification percentage may still be permissible, with the specified portion of dividends or profits donated to charity. Shariah-compliant S&P 500 funds and ETFs can also be permissible when they meet recognized Shariah screening standards.
Responding to your question, Sheikh Ahmad Kutty, a senior lecturer and an Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
Yes, it is generally permissible to invest through platforms like Awaed if they adhere to recognized Shariah standards, such as those established by AAOIFI, and are overseen by a qualified Shariah board.
These platforms meticulously screen companies before including them in their investment portfolios. They exclude businesses primarily involved in activities clearly prohibited in Islam, such as conventional banking, alcohol, gambling, pornography, and similar industries.
Additionally, they conduct financial screening to ensure that a company’s interest-based income and debt remain within the limits accepted by contemporary Shariah scholars.
You might observe a “purification percentage” listed alongside some companies. This does not indicate that the investment is impermissible. Instead, it signifies that a very small fraction of the company’s income originates from non-halal sources, such as bank interest.
To purify your earnings, you would donate this small percentage of your dividends or profits to charity, without expecting a spiritual reward from that specific donation. The remainder of your investment is considered halal.
The same principle applies to Shariah-compliant S&P 500 funds and ETFs. These funds exclude companies engaged in prohibited activities and follow recognized Shariah screening standards. If a fund explicitly states that no purification is required, you may trust its Shariah board’s assessment. If it provides a purification percentage, simply donate that amount from your returns.
In summary, investing in Shariah-screened stocks and funds offers a permissible and responsible method for wealth creation. By selecting companies that meet recognized Shariah standards and purifying any small amount of mixed income when necessary, you can invest with confidence while upholding Islamic principles.
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Almighty Allah knows best.
