FAQs

Question

Can we invest in Asset Management Companies

Answer

If there is an opportunity for it and one wants to do so, such investment is possible (as in any kind of business), if it is Shariah compliant. However, we think the thrust of your question and the intent behind it appears to be whether it is compliant to invest in funds floated by an AMC. Generally AMCs offer several types of funds, each of which has its own investment strategy and objectives. Almost all such funds fall short of the Shariah compliance requirements stipulated for them. Hence, it is not allowed to invest in such funds. However, if the objectives and strategy of a fund are congruent with Shariah requirements one could invest in it. Tata Ethical Fund (TEF) is an instance of such a fund. At the same time, if one is in a position and has an opportunity to invest in the AMC which runs TEF – an unlikely event – still investing in it will be non-compliant, as the remaining funds under that AMC are all non-compliant.


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