Ethical way to build your portfolio

One of the disadvantages of the Shariah concept is that it limits the investment horizon for a fund manager due to restrictions against investing in certain sectors considered morally deficient under Islamic religion, thus posing a challenge to produce returns.
Despite the restrictions some of these schemes have significantly outperformed not only their benchmark Shariah indices but also the broader markets. In 2010, BSE Bankex index made around 32% gains, while benchmark Sensex posted nearly 17% returns. During the same period, the Shariah funds from Tata and Taurus, which have no exposure to the banking sector, returned 20-24%.

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