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A Uniquely Ethical Offering

If there was a ‘Uniqueness Competition’ held between all the fund houses in the Indian mutual fund industry, where the fund house with the most number of ‘unique’ funds would be crowned the winner, Benchmark Mutual Fund would win hands down. With an intension to diversify its kitty of funds, the fund house is running wild with its unique theme. After having filed offer documents for its Covered Call Fund, Silver BeES and Oil BeES, the fund house has now filed an offer document for its Shariah Benchmark Exchange Traded Fund.

The investment objective of the scheme, like other ETFs, is to provide returns that, before expenses, closely correspond to the total return of the security as represented by its benchmark S&P CNX Nifty Shariah Index.

The S&P CNX Shariah Index represents 40 largest and most liquid companies in the NSE. The index’s top 10 companies, which account for 62.61 per cent holdings, include Reliance Industries, Larsen & Tourbo, Infosys Technologies, Bharti Airtel, Reliance Communication, Tata Steel, Bharat Heavy Electricals, Oil and Natural Gas Corporation, Satyam Computers and Reliance Energy.

Shariah Funds are based on specially structured Islamic Law which permit Muslim investors to invest in restricted sectors where business activities like Pork, Alcohol, Gambling, Financial, Advertising and Media, Pornography, Tobacco and Trading on Gold and Silver as Cash on deferred basis are excluded.

Reliance Money currently offers Shariah-compliant portfolio management services. In the past, Taurus Mutual Fund has also come out with the concept of Shariah in the fund Taurus Parsoli Ethical Fund which hasn’t got any response as of yet. Will Benchmark’s similar attempt get a favorable response from SEBI is something to wait and watch out for.

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