How to evaluate a fund if its Sharia Complaint or not.
I know that one should look that no financial or entertainment sectors are listed in the composition breakdown. But what about Consumer Defensive and Consumer Cyctical. Let say if Walmart falls under Consumer Defensive sector and they sell all sort of things, will that fund be doubtful according to Sharia. Same with Johnsons and Johnsons or P&G etc as they make all sort of product and if these companies are also invested in by the fund manger, will it be prohibited too?
Should one opt out and lose employer’s contribution?
Re: 401K investment - how to check if a fund is sharia complaint
How can any fund be Sharia compliant? They all rely on interest, or riba, which is forbidden. Someone please correct me if I'm wrong.
Re: 401K investment - how to check if a fund is sharia complaint
Have you ever invested or worked for large corporation or read about 'funds' and SEC?
No. It depends on the nature of business these funds invest in. If they invest in Banks, Alcohol or other business that do haram business than it becomes haram automatically. However, if you take example of Dell, they don't sell anything that falls under haram catagory. But if they borrow money from banks time to time, and also raise money by selling stocks to public, then there is a difference of opinion. Some say its permissible some say its not. There is a big debate about that, since if a company takes loan from bank to expand their business and you are employee, your income also has some traces of that investments. With this argument the whole financial system of the world becomes haram.
So sticking to the point here, I want to know if there are any guidelines on sector level.