According to iShares:
The MSCI World Islamic Index offers exposure to stocks from the MSCI World Index which comply with Shariah investment principles.
I don't get it, the ETF LSE:ISWD (ISHARES II PLC ISHARES MSCI WORLD ISLAMIC) has IBM as 1 of the companies.
On 2012/12/31, IBM had assets in the form of cash and cash equivalents of about $10 million USD. I'm not saying that IBM does this, but what that would normally mean is that they have raw cash in a bank account earning interest, and/or short-term government bonds earning interest, which would normally go back into the business, i.e. consuming interest.
That is interest, which is haraam isn't it? So how can LSE:ISWD be considered halaal? Via the ETF, you end up being a partial owner of IBM don't you? Which means you own a business which is consuming interest from cash in a bank account!
I mentioned IBM here for no particular reason. I could have mentioned any of the companies listed in this ETF, and I would be surprised if any of them were not earning interest from cash in bank accounts...
For example, Intel is also in the list, who have about $8.5 million as cash possibly in banks and short-term government bonds, so chances are probably high that they are earning interest on that money which goes back into the company.
According to HSBC Amanah:
HSBC Amanah is the Islamic financial services division of the HSBC Group. It's been specifically designed for investors who want to invest in equity markets in compliance with Shariah. And is uniquely positioned to understand, structure and deliver financial solutions that are compatible with the requirements of Islamic law.
Then there is HSBC Amana Freedom Funds which are supposedly halaal too. In these funds you will find Apple, which based on their annual report, earned 1.03% interest on cash which they have in banks, and 0.77% interest on cash equivalents. If we round it off to 1%, based on Apple having 10.5 million in cash and cash equivalents, they earned about 100,500USD of interest last year...
So my question, if you missed it, How are islamic funds/etf halaal investments? I really don't see the halaal part...?