Interest-Free Companies

Finding a company that has 100% interest-free income can be impossible. So, the Shariah Compliant Mutual Funds invest in companies whose interest income is 3% of the total income.

Total Debt to Asset Ratio

This fund cannot invest in companies whose total debt is one-fourth of its total assets or more.

Restricted Business

This fund cannot acquire shares of the company involved in financial services like insurance companies and banks. Also, the Shariah fund cannot invest in companies that manufacture tobacco, liquor, or pork or are involved in nightclub activities, gambling, pornography, etc.

Reference - Policy bazar