Shariah-compliant mutual funds are governed by the requirements of Shariah law and the principles of the Islamic religion. These funds are considered to be a type of socially responsible investing. There are three Sharia-compliant mutual funds in India—Tata Ethical, Taurus Ethical and Nippon India ETF Shariah BeES. The first two are actively managed schemes and Nippon India ETF Sharia BeES is an exchange-traded fund (ETF) that invests in the Nifty50 Sharia Index.
Tata Ethical Fund is an open ended equity fund which invests in a diversified equity portfolio based on principles of Shariah. The investment objective of the scheme is to provide medium to long-term capital gains by investing in Shariah compliant equity and equity-related instruments of well-researched value and growth-oriented companies.
Taurus Ethical Fund is an open ended equity scheme with investment in stocks from S&P BSE 500 Shariah Index universe. The investment objective of the scheme is to provide capital appreciation and income distribution to unit holders through investment in a diversified portfolio of equities, which are based on the principles of Shariah.
Nippon India ETF Shariah BeES employs a passive investment approach designed to track the performance of Nifty50 Shariah TRI. The Scheme seeks to achieve this goal by investing in securities constituting the Nifty50 Shariah Index in the same proportion as in the Index.
Alternatively you can also invest directly into the constituent stocks of Shariah Indices of NSE & BSE. You need to have a demat cum trading account to be able to invest into an ETF and stocks.