Is it permissible for me to invest in SOXX or should I exit my position?
الجواب حامدا ومصليا
The permissibility of investing in a company is largely contingent upon its main revenue source. Generally, one may invest in a company whose main revenue source is permissible, such as those in the basic materials, technology, energy, and utilities sectors. In contrast, one may not invest in a company primarily involving insurance, gambling, liquor, pork, or pornography.[1]
If a mutual fund or exchange traded fund (ETF) is primarily invested in permissible companies, then it will be permissible to invest in it. One should note that one may not invest in any fund that is primarily invested in bonds, as those are interest-based and, hence, impermissible.
In the context of the Semiconductor ETF SOXX, its majority investments are in Sharia-compliant companies.[2] Therefore, it is a permissible investment, and you do not have to divest from it.
And Allah knows best.
Mf. Farhan ul Haq
Assistant Mufti, Darul Iftaa Chicago
Checked and Approved:
Mf. Abrar Mirza
Head Mufti, Darul Iftaa Chicago
[1] Usmani, Muhammad Taqi. An Introduction to Islamic Finance: Principles of Shariah Governing Islamic Investment Funds, 203-212. Quranic Studies Publishers: Karachi, Pakistan 2018.
[2] Morningstar, iShares Semiconductor ETF SOXX, Accessed November 15, 2023.
https://www.morningstar.com/etfs/xnas/soxx/portfolio