An equity fund invests in shares of companies. Its return can come from two main sources: dividends distributed by companies and capital gains when shares are sold at a higher price than their purchase price.
Because buying a share represents participation in a company, the nature of the company's business and financial practices becomes relevant to Shari‘ah screening.
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Islamic Investment Funds: What Makes a Fund Shari‘ah-Compliant?
An equity fund invests in shares of companies. Its return can come from two main sources: dividends distributed by companies and capital gains when shares are sold at a higher price than their purchase price.
Because buying a share represents participation in a company, the nature of the company's business and financial practices becomes relevant to Shari‘ah screening.