The Potential of Using the Turnover Ratio to Estimate the Zakat of Investment Funds

Authors

  • Mohammad Al-Suhaibani Association for Social Economics, Kingdon of Saudi Arabia
  • Khaled Al-Muhanna Imam Muhammad Ibn Saud Islamic University, Kingdom of Saudi Arabia
  • Slim A. Mseddi Imam Muhammad Ibn Saud Islamic University, Kingdom of Saudi Arabia

DOI:

https://doi.org/10.52747/aqujie.2.2.157

Keywords:

Zakat of investment funds, portfolio turnover ratio, stocks, stock market, mutual fund performance

Abstract

The objective of the paper is to evaluate the possibility of using the turnover ratio as an indicator of the act of trading by investment fund managers in the financial markets, based on the fiqh opinion that links the zakat of investment funds to the extent of the fund manager’s activity in trading the components of fund’s portfolio. The paper concluded that the investment portfolio turnover ratio is a suitable estimate for the fund manager’s trading activities. Based on literature studied the relationship between the turnover ratio and three variables: (1) the performance of investment funds, (2) the fund investment time horizon and (3) the fund capital gain tax, the paper derived six testable hypotheses about the zakat of investment funds. The paper concluded with several practical recommendations.

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Published

2022-12-21

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Section

Articles

How to Cite

The Potential of Using the Turnover Ratio to Estimate the Zakat of Investment Funds. (2022). Al Qasimia University Journal of Islamic Economics, 2(2), 01-34. https://doi.org/10.52747/aqujie.2.2.157

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