Are money market funds halal?
Conventional money market funds are not — they hold T-bills, commercial paper, and repos, all interest-bearing loans.
A money-market fund is professionally managed short-term lending; its yield is a blend of interest rates. This includes the default 'cash sweep' at nearly every brokerage, which is how many otherwise-screened portfolios quietly accrue riba on idle cash.
Fixes: switch broker sweeps to non-interest cash where offered, keep working cash lean, and use Islamic money-market alternatives (wakala-based liquidity funds) where your market has them.
The compliant alternative
Non-interest brokerage cash options, Islamic liquidity funds where available, short-duration sukuk.
Check your own portfolio
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Download Penny for iOSFAQ
My settlement fund is a money market fund — am I earning riba without asking?
Likely yes. Check your broker's cash-sweep settings; most offer a bank-deposit or non-interest alternative. Donate accumulated interest.
Related
- Are Treasury bills (T-bills) halal?
- Are savings accounts haram?
- Are CDs (certificates of deposit) halal?
Educational summary of commonly held scholarly positions — not a fatwa or financial advice. Where scholars differ, we say so; for a binding ruling on your situation, consult your scholar. See how Penny screens.