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We are investigating the extent of overlap between the objectives and components of Christian funds, Islamic funds, both classified as faith-based funds or Morally Responsible Investment (MRI) funds, as well as the related category of Socially Responsible Investment (SRI) funds, also known as "Green Funds" or "Ethical Funds."
Faith-based funds invest in companies whose products and policies are consistent with the investor's religious (usually moral) beliefs, whereas SRI funds invest in companies based on social values. The amount of money invested in SRI funds is $2 trillion.1,2 The size of the Islamic finance market is estimated at $300 billion.3 however there are no available statistics on the money invested in Christian funds. In the United States, it is estimated that $1 in every $7 is being invested according to some social criteria.4
The number of Islamic funds in the world in 2004 was estimated to be 130,5 the number of Christian funds in the U.S. was less than 24 in 2005,4 whereas the number of SRI funds in the U.S. was 200 in 2003.2
We would like to explore the possibility of a mutual fund that encompasses all three objectives.
DEFINITION OF A MUTUAL FUND
Mutual funds are investment companies which pool money from investors who share a common objective. The money is then invested by professional managers in the stocks and/or bonds of different companies, thus giving investors three benefits of professional management, diversification, and liquidity. In the U.S., there are hundreds of financial companies which offer investors a very wide and sometimes confusing selection of mutual funds. The objectives range from growth, income, international diversification, technology, healthcare, commodities, faith-based, socially responsible investing, etc. Today, it is estimated that the U.S. mutual fund industry has grown to approximately $7 trillion.
ISLAMIC MUTUAL FUNDS
A Description of Islamic Mutual Funds
Muslims represent about one fifth of the world's population . It is estimated that the size of the Islamic finance market is about $300 billion.3 There are currently around 7 million muslims in the U.S. Various money management companies in the U.S., the Middle East, and around the world, have recently started developing products which aim to meet the needs of this niche market, by developing funds which abide by Sliariali (Islamic principles of...