FAQs

Question

Are Gold ETFs Shariah Compliant

Answer

Gold ETFs are Shariah Compliant because they are backed by physical gold which is one of the important conditions for investment asper Shariah (other conditions are investment in money market instruments should not be more than 1.5% of the AUM and interest income should not be more than 3% of total income). When an investor invests in units of gold ETF, gold of that same value is bought in the fund and stored with the custodian and its value or even quantity of gold equivalent to the value of the Gold ETF units at prevailing market price (in case of large investors) are delivered to investors on demand, against redemption of the units. TASIS releases monthly lists of Shariah Compliant Gold ETFs based on the tolerance criteria advised by its Shariah Board.

Allah Knows Best...