Shariah-compliant MF a hit with other communities too

Shariah-compliant MF a hit with other communities too
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First Published: Fri, Mar 09 2007. 03 28 AM IST
Updated: Fri, Mar 09 2007. 03 28 AM IST
The only Shariah-compliant mutual fund operating in India currently is the Tata Select Mutual Fund. This fund was instituted with an objective to provide medium to long-term capital gains and abstains from sectors such as liquor, tobacco, consumer goods, finance and banking, as well as other investments in interest-bearing securities.
The fact that the fund abstains from prohibited sectors has touched a chord with other religious communities, including the Jains. It also helps that Tata Select has given 40% annual returns to its shareholders since the fund’s inception in 1996.
Ved Prakash Chaturvedi, Tata Mutual Fund’s Managing Director, however, says it is a mere coincidence that the fund’s holdings also appear to be Shariah-compliant.
”It’s too early for the mutual fund industry to think in terms of socially responsible funds that are quite popular in the West,” he says. “I do not think there is adequate awareness or demand for socially responsible funds in India just as yet.”
India’s mutual fund industry has around 35 companies, which manage a corpus of Rs 3,41,378 crore. There is currently no fund that bills itself as an ethical fund in the universe of mutual funds in India. Ethical funds, dozens of which are marketed in many developed markets, follow socially responsible investment strategies and stay away from stocks of those companies that manufacture tobacco, liquor and even defence equipment.
(saumya.r@livemint.com)
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First Published: Fri, Mar 09 2007. 03 28 AM IST
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