What to check in a fund
What matters when you’re looking at a product, in plain English. This isn’t a ruling. It helps you read the documents.
A named certifier
A shariah board or a recognised index methodology, named in the fund documents. A word in the marketing is not a certificate.
What it holds
The factsheet shows top holdings and sectors. Screens exclude conventional finance, alcohol, tobacco and gambling, usually with a small tolerance for incidental income.
Debt limits
Screens test debt and interest-earning assets, commonly at around a third of market value or assets. The limit depends on the standard, which is why two halal funds can hold different companies.
Purification
A small part of a company’s income may need giving away. Some funds work this out for you and some leave it to you.
Cost and risk
Compliance doesn’t protect you from a falling market, and shariah funds lean on particular sectors. The ongoing charge compounds too. Your capital is at risk.
Who approved it
The provider should name who approved the product, not just describe it as Islamic.
How the profit is earned
You’ll see an expected profit rate, with an explanation of what your money does. Expected isn’t guaranteed.
Protection
Eligible deposits with UK-authorised banks are covered by the FSCS. Check that yours is one of them.
Access
The notice period, the term and what leaving early costs all differ between accounts.
Direct or through a platform
The rate and minimum can differ, and the money sits with the named bank.
The follow-on rate
You move to it when the fixed period ends, so diary a review at least three months ahead.
Extra payments
Some plans charge above an annual allowance.
Insurance and repairs
Who covers the building and who pays for repairs depends on the plan, so get it in writing.
Selling early or falling behind
Early settlement terms are where the fine print lives.
Regulation
Plans for people living in the property are regulated by the FCA.
Your current fund
Default funds generally aren’t built with shariah in mind, and they commonly hold conventional bonds.
The fund list
Many providers offer a shariah option. If you can’t see one, your provider or HR can tell you what’s available.
Whether switching moves your whole pot
Future contributions and existing savings may be separate steps.
Your age
Default funds often reduce risk as you near retirement. A single equity fund won’t do that for you.
The charges
A higher fee is worth knowing about before you move.
General information, not a ruling or advice. Take anything you’re unsure about to a scholar you trust.
Capital at risk. Investments can fall as well as rise, and you could get back less than you put in. Past performance is no guide to the future. Nothing here is a recommendation to buy any fund or platform.