Dr. Monzer Kahf, a prominent economist and counselor states: “In retirement plans, your choice is normally limited to a few funds offered by the plan management. You need to do three things:
1. Try to convince your plan management to offer the few Islamic funds that are available in the market today. There is an Islamic fund offered by the Bank of Montreal and there is the DJ Islamic Market Index Funds of NAIT (North American Islamic Trust), and there are a few other funds.
2. Select from the available funds those funds that have least involvement of the prohibited stock. Prohibited stocks are stocks of companies in the financing sector, bonds, entertainment, military, and the like.
3. You need to always estimate periodically the amount of return that comes from funds that invest in some non-permitted stocks and in bonds. When you liquidate, you must give away to a Muslim charity that estimated part of the return that comes from non-halal investment.
All funds provide helpful information about the distribution of their investment among different industries and companies in their annual and semi-annual reports.”