Millennium Post

SBI MF to launch Shariah compliant equity fund

SBI Mutual Fund will be launching a Shariah-compliant diversified equity fund next week, which is aimed at attracting investments from the country's large Muslim population. The leading asset management firm will become the fourth fund house in India to have an Islamic equity fund after Goldman Sachs MF, Taurus MF and Tata MF.

‘We will be launching the SBI Shariah Equity Fund on 1 December. The open-ended scheme will be a diversified equity fund, including large, mid and small cap companies,’ SBI MF Chief Marketing Officer DP Singh explained while outlining the details of the scheme.

The fund house declined to disclose how much it is planning to raise from this fund, saying this is a niche product and something the MF has not done in the past.

The stocks to be chosen for the fund will be from the Shariah-compliant firms, which number over 170 now. Proceeds from the fund will be invested in Shariah-compliant equity and equity-related securities, Singh said.

Shariah laws prohibit one from investing in companies dealing with businesses like alcohol and tobacco, among others. They also do not allow interest payments.

The scheme opens on 1 December for subscription and closes on 15 December. The fund is likely to reopen on or before 26 December.

The scheme's objective is to provide medium to long-term capital gains by investing in Shariah-compliant equity and equity-related instruments.

However, there can be no assurance that the investment objective of the scheme will be realised, according to the scheme information document posted on the company's website.

The scheme has two plans — regular and direct— and the minimum investment size of initial purchase is Rs 5,000.
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