List of Halal Mutual Funds in India

Seeking the best investment option with Islamic finance principles? Then the greatest suggestion would be Shariah Compliant Mutual Funds. It is easy for people to invest their money productively. 

Before we get into the details of Halal mutual funds or Shariah compliant mutual funds, understand what it is. 

What Are Shariah Compliant Mutual Funds? 

A Shariah compliant mutual fund is a one-kind investment option aligned with Islamic finance principles. They provide access to companies with Islamic law intending to obtain profitable returns on their investments.

The investors must not consider the companies involved in Maysir (Gambling), Riba, and Gharar (Speculation). 

3 Best Halal Mutual Funds in India

The Shariah law adheres to certain principles and restrictions which are ethical for Muslims. In the index of companies, here with the 3 best Halal funds in India are mentioned below: 

1. Taurus Ethical Fund 

It is well-suited for investors seeking long-term capital growth. It is efficiently managed by a Taurus mutual fund company as the investors can make a minimum investment of Rs. 5000 or ₹500 every month.

The return on investment is better than the index as well as the Tata Ethical Fund. The expense ratio is somewhat high, which is 2.03%. 

2. Tata Ethical Fund 

One of the top-tier mutual funds managed by the reputed brand (i.e.) Tata Mutual Fund Company. Investors can make a minimum amount of Rs. 5000 at one time (Lumpsum).

This is the best option for people looking for a diversified equity investment rather than being exposed to the banking and finance sectors.

It allows individuals to enjoy long term capital growth. If you invest Rs.1000 for a year, you will be charged Rs. 14.8 only which is deducted from your principal amount. 

3. Nippon India ETF Shariah BeEs

The fund has almost 90% investment in equity securities. To invest in this fund, the investors must have a demat and trading account with a share brokerage company. The return of this fund is not more than 10% CAGR. You can go for this fund if you have a share market account. 

Mutual Fund1 Year Return (%)3 Years Return (%)5 Years Return (%)
Taurus Ethical Fund48.38%19.86%19.50%
Tata Ethical Fund31.81%18.04%19.02%
Nippon India ETF Shariah BeEs30.00%11.7%14.9%

Features of Shariah Compliant Mutual Funds 

According to Islamic law, there are some barriers for investors who are not authorized to access all fund categories. The Halal mutual fund comes with defined principles and restrictions that are shown below

Investment Based on Islamic Principles 

  • Investing in things that can hurt people or the environment is strictly prohibited 
  • Investment in businesses involved in destructive stuff like guns, cigarettes, and alcohol is prohibited.

Investment Rules In Shariah Compliant Mutual Funds 

  • No companies with a lot of debt. 
  • Muslims are strictly restricted to staying away from Riba, which is an unfair way of money-making. It is against the Quran. 
  • Islamic funds will never be in fixed deposit 
  • They can’t invest in any harmful stuff.
  • Anyone, other than Muslims can invest in these kinds of mutual funds 


  • Is Tata Ethical Fund Halal or Haram?

    Tata Ethical Mutual Fund is Halal whereas the fund adheres to the principles of Shariah law. Investment under this fund is prohibited in certain industries such as gambling, alcohol, or related harmful stuff. 

  • Can Muslims Invest In Mutual Funds?

    Muslim investors are restricted to the investment of businesses in interest-based transactions. This is why the Halal mutual fund is derived specifically for Muslims and strictly avoids any form of interest rates.