Want to invest in stock markets but in accordance with the principles of Shariah? The answer to your investment solution can be Shariah ETFs. This is the most convenient method to invest in stock markets as far as the investments are permitted by the Read more 
Name | LTP | Change (%) | AUM (₹ Cr.) | Volume | Expense Ratio | 1M Return | 3M Return | 1Yr Return | 3Yr Return | 5Yr Return |
|---|---|---|---|---|---|---|---|---|---|---|
| NIP IND ETF SHARIAH BEES | ₹481.90 | +0.81 | ₹51.07 | 1223 | 0.96 | -7.85 | -5.67 | -1.85 | +18.68 | +36.83 |
A Shariah ETF is a passive investment vehicle that only follows a Shariah-compliant index. This means that it will only invest in stocks that are qualified to be in its index and will not involve itself in areas of investing that are prohibited by Shariah laws, including conventional banking, alcohol, tobacco, gambling, and any interest-based financial services. In simpler words, a Shariah ETF enables you to make an investment that is ethical and in compliance with Islamic laws within a single diversified instrument.
The Shariah ETF is listed on NSE and BSE exchanges and can be sold and purchased similarly to ordinary shares. You are able to buy or sell at the current market price during market hours.
In order to trade in Shariah ETFs, you will need a Demat & Trading account. After opening this account, you can purchase Shariah ETFs just like purchasing shares.
Want to start investing in Shariah ETFs? Here’s how you can do that:
Step 1: Log in to your trading account. If you don’t have one, click here.
Step 2: Select the Shariah ETF you want to buy from the list given above.
Step 3: Purchase the required quantity.
Step 4: After purchase, the units will be available in your portfolio on the next trading day.
Step 5: You can also begin a daily, weekly, or monthly ‘Stock SIP’ or ‘ETF SIP’ in Shariah ETFs to invest systematically while adhering to Shariah principles and benefit from Averaging & Compounding over time.
On the other hand, you could also invest in Shariah- compliant Mutual Funds that invest in only Shariah-approved stocks or in Shariah ETFs. This serves as an indirect investment in compliance with the instructions of Islamic investments.
Benefits of ETFs:
Security: ETFs are registered securities with substantial backing of underlying assets, thus providing great investor protection.
Shariah ETFs track a Shariah-compliant stock market index made up of companies screened according to Islamic investment principles. These ETFs invest only in businesses that meet Shariah guidelines and avoid sectors such as conventional banking, alcohol, tobacco, gambling, and interest-based services. They are passively managed and aim to replicate the performance of their underlying index.
- Ethical investing: Aligns investments with Islamic financial principles. - Diversification: Provides exposure to multiple Shariah-approved companies through a single instrument. - Transparency: Holdings and pricing are publicly available. - Liquidity: Can be bought and sold on stock exchanges during market hours. - Cost-efficient: Typically have lower expense ratios compared to actively managed funds.
- Market risk: Returns depend on overall market performance. - Limited sector exposure: Exclusion of certain industries may reduce diversification. - Tracking error: ETF returns may slightly differ from the underlying index. - Liquidity risk: Some ETFs may have lower trading volumes, affecting ease of buying or selling.
Investors may incur an expense ratio charged by the fund house, brokerage fees when buying or selling through a trading account, Securities Transaction Tax (STT), and applicable exchange charges. Reviewing the total cost helps in evaluating overall returns.
Yes, Shariah ETFs can be suitable for beginners seeking diversified and rule-based investments aligned with Islamic principles. However, investors should assess their financial goals, risk tolerance, and investment horizon before investing.
