Bonanza Portfolio, the Mumbai-based asset manager, has partnered with Pragmatic Wealth Management to build a new Shariah fund that offers alternative investment opportunities to Indians. 

Bonanza-Pragmatic Shariah Fund, the new fund, works under the newly-created Shariah Portfolio Management Services and will be managed by Imtiaz Merchant, the founder of Pragmatic Wealth. Bonanza Portfolio will handle all marketing and operational activities of the fund. Its primary market is high net worth individuals and corporate and retail investors with a minimum net worth of Rs5 lakh ($10,000).

As per Shariah guidelines, the fund will only invest in permissible sectors, such as automobiles, real estate, healthcare, power and utility and consumer goods and services. The law forbids the use of interest or speculation on any of the investment services, although this move enables the almost 150 million Muslims in India to participate in the stock market, the companies said in a statement. 

"Shariah PMS is an opportunity for Muslim and non-Muslim investors to employ their savings in superior companies with the angle of social welfare and not making heavy interest payment compared to other companies," said Dr MY Khan, the chairman of PWM.

The fund will be benchmarked against Sensex, Nifty and S&P Shariah Index and will totally refrain from day's trading as mandated by Shariah laws.