What is the ruling on investing in Exchange Traded Funds (ETFs), especially the iShares MSCI World Islamic fund, taking into consideration the permissibility of purifying the share of profits paid from usury by donating the usurious portion to charities?

Investment funds deal in stocks, bonds, commodities, and indices. If an investment fund is Islamic and requires purification from riba (interest/usury), this means it deals with mixed stocks. These are stocks of companies with permissible activities that nonetheless borrow or deposit with riba.

Scholars have differed on the ruling concerning mixed stocks:

1. Absolute prohibition: This is the view of the majority of scholars and the decision of Islamic Fiqh Academies. 2. Permissibility with purification of the riba portion: This is the view of some contemporary scholars.

The preponderant view is the prohibition of dealing in these stocks, and the impermissibility of trading or participating except in pure stocks; this is because the shareholder becomes a partner in the company's usurious activities.

The resolution of the Islamic Fiqh Academy of the Muslim World League states:

Establishing a joint-stock company with permissible objectives and activities is permissible in Islamic law. It is forbidden to invest in companies with prohibited objectives (such as riba or manufacturing prohibited items). It is not permissible for a Muslim to buy shares of companies or banks that deal in riba, or manufacture or trade in prohibited items. If a person unknowingly bought shares in a usurious company and then became aware, he must exit it.

The resolution indicates that buying shares of companies that deal in riba while being aware of it means the buyer participates in the usurious transaction, because a shareholder owns a share in the company's assets, and those who directly engage in lending and borrowing with riba do so on his behalf. Acting as an agent for a prohibited act is not permissible.