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Is investing in shares and mutual funds permissible in Islam?

Answered as per Hanafi Fiqh by Muftisays.com
Salaam alai kum,

Is Investing in Shares and mutual funds allowed in Islam.




Al-jawab billahi at-taufeeq (the answer with Allah’s guidance)

Investing in shares are permissible.

Please see: http://www.muftisays.com/qa/question/4188/forexsharecommodities-trading-on-internet.html

Mutual funds: An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. (Investopedia)

Investing in mutual funds will not be permissible. The reason is that one is unaware what kind of companies the fund will invest into i.e. Haram companies. Also, the funds normally invest in bonds, which are prohibited.

Alternatively, one may invest in mutual funds based on Islamic principles, prior seeking consultation from their local scholar.

And Only Allah Ta’ala Knows Best.

Moulana Qamruz Zaman
London, UK

This answer was collected from MuftiSays.com, based in London (UK). It is one of the fruits of Darul Uloom London. Many ‘ulama are involved in answering the Q&A on the site, including: Shaikul Hadeeth Mufti Umar Farooq Sahib, Mufti Saifur Rahman Sahib, Mufti Abdullah Patel Sahib, Maulana Qamruz Zaman Sahib, Mufti Abu Bakr Karolia Sahib.

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