Investing In Islamic Funds: A Practitioner's Perspective

Helpful Hints

• Islamic Divine Law is derived from the divine source that is Holy Qur’an and Sunnah (the sayings, deeds, and endorsements of the Prophet, peace be upon him).
• Shariah principles benefit public interest, which constitutes protection of everything that is useful for whole or most of the community.
• The prohibition of interest arises from the fact that money in Islam is perceived as a store of value and unit of measurement. Money is a medium of exchange and not a commodity that one can gain premium.
• As an alternative to these prohibitions, Shariah encourages trade and commerce, where the liability, risk, and profits taken are shared among participants.
• Gharar or uncertainty in contracts may lead to unknown results, or vagueness in rights and liabilities, which might be exploited to deceive people.
• In the act of gambling, winning and losing are driven by pure chance. This extreme behavior of risk taking is prohibited, in view that outcome is based on chance and not from knowledge or skill.
• It is ordained in the Qur’an that the consumption or engagement of impure commodities such as pork and alcohol are haram. From an outcome standpoint, these commodities have been proven to bring more harm than benefits.