Question 1

What is the AAOIFI screening methodology?

Accepted Answer

The AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) screening methodology is the global standard for determining Shariah compliance of stocks. It uses a two-tier process: a business activity screen that excludes revenue from impermissible industries (alcohol, gambling, conventional finance, pork), and a financial ratio screen ensuring interest-bearing debt and interest-earning assets remain below 30% of market capitalization.

Question 2

How does dividend purification work?

Accepted Answer

Dividend purification calculates the portion of your investment earnings that comes from non-compliant income (typically less than 5% for halal-screened stocks). PureInvest automatically calculates the exact amount you need to donate to charity to purify your portfolio returns, keeping your investments fully Shariah-compliant.

Question 3

What is halal stock screening?

Accepted Answer

Halal stock screening is the process of analyzing publicly traded companies to determine whether they comply with Islamic (Shariah) investment principles. This involves checking both the company's core business activities and its financial ratios against established thresholds set by bodies like AAOIFI.

Question 4

How does PureInvest determine if a stock is halal?

Accepted Answer

PureInvest applies the AAOIFI Shariah Standard No. 21 for investment in shares. Each stock goes through a business activity screen (excluding impermissible industries) and a financial ratio screen (ensuring interest-bearing debt stays below 30% of market cap). Stocks that pass both screens are classified as Shariah-compliant.

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