If you’re trying to grow your wealth while staying true to your values, it’s time you explore Shariah-compliant funds. Ethical investing is no longer a niche, it’s a powerful instrument to make the most of the market conditions.
Shariah-compliant equity funds are a suitable choice for investors looking to align their strategies with their principles. In this blog, we have listed some of the top mutual funds compliant with the Shariah law for you to invest in.
What Are Shariah-Compliant Equity Funds?
Shariah compliant mutual funds are designed to follow the investment principles mentioned in Islam. This implies:
- They exclude companies involved in alcohol, gambling, interest-based financial services, tobacco, weapons, and other non-halal activities.
- These funds also avoid income generated from interest and focus only on stocks with low or no debt.
- A Shariah board or certified advisory body screens and monitors the holdings of the funds to ensure compliance.
In brief, the goal of Shariah-compliant funds is to help you invest ethically. These funds are open to everyone, not just the followers of Islam, and appeal to those looking for socially responsible options to invest.
Top 4 Shariah Compliant Mutual Funds to Invest in 2025
Here are our best picks among ethical mutual funds that comply with Shariah norms.
- Tata Ethical Fund
Investors seeking a balance between values and performance must check out the Tata Ethical Fund. This is one of the top Shariah equity funds that returned over 21.30% in the last five years to investors. It invests in companies that comply with Shariah guidelines and avoids sectors like banking, alcohol, and gambling.
The Tata Ethical Fund gives you exposure to sectors like technology, healthcare, and basic materials. With this mutual fund, you can enjoy steady growth without compromising your beliefs.
- AUM: INR 3,216.02 crore
- NAV: INR 417.4940
- Expense ratio: 0.68%
- 1-Year return: 1.69%
- 3-Year return: 11.74%
- 5-Year return: 21.30%
2. Taurus Ethical Fund
Launched in 2013, the Taurus Ethical Fund is one of the earliest Shariah-compliant mutual funds in India. It strictly adheres to Shariah-compliant principles. While allocating the assets to different segments, the stocks are carefully scrutinized.
You can get started in this fund with an SIP starting from just INR 500.
- AUM: INR 274.32 crore
- NAV: INR 135.1100
- Expense ratio: 1.64%
- 1-Year return: 2.53%
- 3-Year return: 14.18%
- 5-Year return: 20.81%
3. Quantum Ethical Fund
The Quantum Ethical Fund is a relatively new Shariah-compliant fund, launched in December 2024. Investors can create an SIP or put in a lump sum amount in this mutual fund, starting from INR 500.
While the long-term performance of the mutual fund remains to be tested, its portfolio looks well-balanced. This ethical fund has a 29.22% weightage on consumer cyclical, followed by 20.65% in technology.
- AUM: INR 46.50 crore
- NAV: INR 9.3300
- Expense ratio: 0.74%
- 1-Month return: 0.97%
- 3-Year return: – 1.89%
- 5-Year return: N/A
4. Nippon India ETF Shariah BeEs
If you’re looking for a passive ETF-based investment option that complies with your ethics, you may consider the Nippon India ETF Shariah BeES. It tracks the Nifty50 Shariah Index, which helps investors diversify their portfolio with an exposure to compliant companies.
Since this is an ETF, you can purchase it like a stock on the exchange, which ensures easy access. Investors seeking a low-cost and tax-efficient way to invest ethically through a market index can go for this fund.
- AUM: INR 32.27 crore
- NAV: INR 500.3606
- Expense ratio: 0.96%
- 1-Year return: 3.50%
- 3-Year return: 6.37%
- 5-Year return: 15.35%
Conclusion
Mutual funds that are compliant with Shariah laws are ideal for anyone looking for a disciplined way to grow their wealth while upholding high principles. With professionally managed portfolios and transparent screening processes, these funds bring together values and returns.
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