Are ETFs Halal: A Complete Guide for Muslim Investors - Musaffa Academy (2024)

FAQs

Are ETFs halal in Islam? ›

Many ETFs can still be considered halal to invest in if the majority of their holdings pass Shariah compliance. You can perform a manual check by researching each underlying asset individually or by using a halal investment screening tool, like Zoya.

Our platform ensures that only halal (Shariah-compliant) stocks and ETFs are available for investment. From start to finish, the whole platform adheres to Shariah guidelines.

The top 5 Halal ETFs for 2023, chosen for performance and compliance with Shariah law, are: 1) Technology Select Sector SPDR Fund (XLK), 2) Invesco Water Resources ETF (PHO), 3) VanEck Semiconductor ETF (SMH), 4) iShares Semiconductor ETF (SOXX), and 5) iShares U.S. Medical Devices ETF (IHI).

Yes they are haram. Go on Zoya and look up those ETFs and you'll see in their top holdings that they have non sharia compliant companies.

As a whole, the Index and hence the ETFs that mimic SP500 are considered not Shariah compliant.

This portfolio is securities and investments are compliant with Islamic finance investment principles as laid down by Sharia laws. Two of the largest index funds are the HSBC Islamic Global Equity Index Fund (halal) and the Vanguard FTSE 100 Index Fund.

Our Processes at Musaffa

Our exceptional financial analysts produce an accurate and comprehensive report on each publicly traded company by analyzing all publicly available information, including annual and quarterly reports, company websites, company presentations, press releases, and much more.

Investing in stocks of companies that operate in compliance with Islamic principles is generally considered halal. This involves selecting companies that avoid involvement in industries such as alcohol, gambling, and pork, aligning with ethical and Sharia-compliant business practices.

Zoya takes the guesswork out of halal investing by helping you build a personalized shariah compliant investment portfolio with confidence and clarity. - Access shariah compliance ratings of thousands of stocks worldwide, for free!

Since our founding, VanEck has been privately owned and operated by the van Eck family. John van Eck launched the firm in 1955 to bring post-World War II investment opportunities to U.S. investors.

Is hlal ETF halal? ›

Wahed FTSE USA Shariah ETF (HLAL)

One of the best halal ETFs to invest in is Wahed FTSE USA Shariah ETF since it has a low expense ratio of 0.50%.

The MSCI Islamic Index Series uses Total Assets as the denominator while the MSCI Islamic M-Series Index uses Average Market Capitalization as the denominator. The Islamic Index Methodology has been approved by MSCI's Sharia advisors' committee of Sharia scholars, as Sharia compliant.

Depending on the type of ETF you are trading with, the levels of risk also may vary. As we mentioned, ETF is buying many stocks at a time, so probably you are interested in the difference between them. Note: Conventional bonds or ETFs that invest in them are not permissible for Muslim investors to invest in.

Spying can be a sin if a person seeks the faults of his Muslim brother for the sake of exposing him in front of other people. It may even be unveiling the secrets of a Muslim brother in front of others. Spying leads to backbiting and backbiting is Haram.

Conclusion: Given the above information, we at Islamicly believe that Amazon.com Inc. is a Shariah-compliant company as per the Shariah screening criteria.

ETFs that hold physical gold are deemed halal. However, ETFs that involve gold futures and options are considered haram (not permissible) as they do not involve owning physical gold and often entail speculation, which is not allowed in Islamic finance.

According to Islamic law, a Muslim is not allowed to invest in all categories of funds. There are certain restrictions on their investment type. Shariah Compliant Mutual Funds are those which invest within the boundaries of Islamic laws.