Abstract

Capital market where capital is traded between parties who have excess capital (investors) to those who need capital (issuer) to develop an investment. The existence of capital market in Indonesia is one of the most important factor in national economic development part, proved to have many industries and companies that use this capital market institutions as a medium to absorb the investment and the media to strengthen its financial position. Factually, capital markets have become the financial nerve center (the world's financial nerve) in the modern economic world today, even the modern economy would not be able to exist without the existence of strong capital markets and global competitive and well-organized.

Indonesia has the largest Muslim population would have a huge potential market for Islamic mutual fund investments. There are special characteristics of Islamic investing, including in the capital markets sector. These limits is the suitability of an investment product on the principles of Islamic teachings. National Sharia Council (DSN) an institution under the MUI (Indonesian Ulama Council) which was established in 1999 has issue provisions regarding investment activities in the Islamic capital market. Provision is poured into some of the MUI on the appropriate investment activities in the Islamic investment products in the Indonesian Capital Market.

In terms of stocks that are traded in stock exchange, ISE has issued a list of companies listed in the stock in accordance with Islamic sharia, or shares listed on the Jakarta Islamic Index (JII). Where shares are listed in this index have been determined by the Sharia Board. Mutual Funds in Sharia transactions are not allowed to perform acts of speculation, in which such offer gharar containing false and other speculative actions.

key word: investment, sharia mutual funds, capital markets of Indonesia, JII, sharia council