An Islamic investment fund in which the subscription amounts are used in purchasing commodities for the purpose of trading (mutajarah), i.e., reselling them for a profit. The trading profits provide the main source of income for the fund, which will be distributed to the shareholders (subscribers) on a pro rata basis.
The commodities must be owned physically or constructively by the seller at the time of acquisition, otherwise purchases would be tantamount to transactions based on short selling (i.e., the trader sells a commodity that is not owned by him at the time of sale, and this type of transaction is prohibited by shari’a).
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