Q: I have a question regarding mutual fund investment. Mutual funds are of 2 types growth and dividend, growth fund we do not get any annual money but suppose someone has invested in mutual fund thinking for the long term like 10-15 years how to pay zakat on it. In dividend fund every year user get dividend he can pay zakat on dividend yield, but pls explain about the growth fund.

A: If the investment is for dividend purposes then the zakat will be paid on 25% of the current value of the portfolio.
If it has been acquired for growth purposes then most likely it has been acquired with the intention of resale since one does not have access to the fund unless it is sold. Therefore in this scenario he will have to pay zakat on the total value of the portfolio on the zakat anniversary date. Please note we advice you to ensure the mutual fund underlying investment is shariah compliant.

And Allah knows best!

Mufti Billal Omarjee
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