Zakat on Mutual and Index Funds

Short answer: Fund units represent the underlying share assets and take the same ruling as shares. If held to sell for capital gains, pay 2.5% of the full NAV/market value on your zakat day; if held long-term for income, either long-term-shares method applies — paying on full value being the simplest and safest. Details: Most investors buy funds intending to redeem at a higher price — making them trade goods zakatable at full value. Funds containing interest-based bonds or haram-sector companies are not shariah-compliant; choose screened funds. If already in a mixed fund, purify the haram-sourced income portion (given away without expectation of reward) — it does not count as zakat. Evidence: Quran 2:267; Sahih al-Bukhari 1 (deeds are by intentions — intent determines trading vs long-term status); AAOIFI Shariah Standard 35; the principles of the Permanent Committee's share-zakat fatwas. For complex individual cases, consult a qualified scholar.