What part of a Guaranteed Investment Certificate is haram?

Q: What part of a Guaranteed Investment Certificate is haram?

My questions are about purifying myself because of my investments.

I have money in a GIC (Guaranteed Investment Certificate) which focuses on blue chip companies: There portfolio breakdown is as follows:

20% Energy, 10% Conglomerates, 10% Utilities, 10% Telecommunications Services, 10% Mines & Minerals, 10% Financial Services, 10% Media, 10% Real Estate, 10% Industrials.

I was told the actual companies might change but the portfolio % stay around the same. The earliest I can get my money out is 2 years and they guarantee return of original investment + .5% annually up to a maximum of 4.5%

1) Could you list all the haram/riba aspects of the transaction?

2) Do I purge the interest I make from the 10% financials? if so how? and are there anything else I have to do to purify it/myself?

3) Just to understand the issues: if hypothetically there was an GIC portfolio that didn’t invest in financials and disliked companies, and they only guaranteed return of investment but a possible increase (not guaranteed) would that be allowed?

الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب

A: The condition of the guaranteed return of the principal is an irregular condition which renders the contract irregular and any increase earned therefrom is not ritually pure. Such income must either be returned to the original party if possible or else given to charitable causes without the intention of reward. Thus the basic structure of the Guaranteed Investment Certificate is repugnant to Shariah and any issues in relation to the portfolios are in addition to this.

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