"Islamic Finance Researches" (IFR)

Examining the Role of Commodity iInvestment Funds in Islamic Economy: Opportunities and Challenges

Document Type : Science - Research (Islamic Capital Market)

Authors

1 M.A. in Economics, Faculty of Economics, Kharazmi University, Tehran, Iran

2 Faculty Member, Faculty of Economics, Kharazmi University, Tehran, Iran

Abstract

1. Introduction and Objective
In recent years, investment funds have emerged as one of the most prominent indirect investment methods within capital markets. Among them, commodity investment funds stand out due to their direct impact on the real economy. These funds can play a pivotal role in regulating commodity markets by mitigating destructive speculative activities, which in turn helps promote social justice, a fundamental pillar of Islamic economics. The primary objective of this study is to identify and evaluate the opportunities and challenges associated with commodity investment funds from an Islamic economic perspective and to explain how such funds align with the broader framework of Islamic financial principles.
2. Methods and Materials
Given the conceptual nature of the study, a qualitative, expert-oriented methodology was adopted. A purposive sampling technique was used to select 10 experts in finance and economics who possess specialized knowledge in Islamic economic systems. Data were analyzed using the Analytical Hierarchy Process (AHP) to systematically prioritize the benefits, disadvantages, and challenges of commodity investment funds. This method allowed for a structured comparison of key factors affecting the performance and alignment of these funds with Islamic principles.
3. Research Findings
The prioritization results showed that market-based volatility was ranked as the most critical challenge facing commodity funds. Other major challenges included political instability and economic crises. From an Islamic economic perspective, speculative activity and its impact on real commodity prices were identified as particularly concerning. On the positive side, the research revealed several benefits of commodity funds, such as professional investment management, risk diversification, and the development of commodity markets, particularly those related to export-oriented products.
4. Discussion and Conclusion
The study's findings highlight both the potential and complexity of integrating commodity investment funds into an Islamic economic framework. While these funds offer several strategic advantages, they also pose significant risks—especially related to market instability and speculative behavior, which conflict with Islamic ethical standards. Nevertheless, if designed and managed appropriately, commodity funds can serve as effective tools for economic development, resource allocation, and the promotion of justice in financial markets. Policymakers and fund managers are encouraged to consider Shariah-compliant mechanisms that minimize speculation and enhance transparency to ensure the alignment of such funds with Islamic economic goals.
JEL Classification: G20, G29, Z12

Keywords

Main Subjects

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Volume 13, Issue 4 - Serial Number 30
August 2023
Pages 847-898
  • Receive Date: 11 September 2024
  • Revise Date: 26 January 2025
  • Accept Date: 18 March 2025