FAQ #6: Does index screening consider contract methods like sukuk, musharakah, mudarabah, etc.?

Understanding Stock Investing #

For indices, they don’t look into the contract per se but the business sector of the company as well as how its finances are being conducted.

Example: we know that interest bearing compliance ratio accounts for interest-based debt securities.

So if a company was engaged on sukuk ijara as an alternative to interest-based securities, sukuk ijarah accounts will not fall under interest bearing compliance ratio but liquidity compliance ratio.

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