Best Halal ETFs for U.S. Muslims (2026 Guide)

For Muslims who want to invest in the stock market while following Islamic financial principles, halal ETFs have become one of the most widely discussed investment options.

An ETF, or exchange-traded fund, is a type of investment fund that holds a collection of stocks inside a single portfolio. Instead of buying individual companies one by one, investors can purchase shares of an ETF and gain exposure to many companies at once.

However, not every ETF is halal. Many conventional ETFs include businesses involved in activities that conflict with Islamic financial principles, such as alcohol production, gambling, or conventional interest-based banking.

Halal ETFs are designed to address this issue by applying Sharia screening rules to the companies included in the fund.

These rules typically remove companies involved in prohibited industries and also screen companies based on financial ratios intended to limit excessive reliance on interest-based debt.

For Muslim investors in the United States, halal ETFs have become one of the most practical ways to build a diversified investment portfolio while attempting to follow Islamic financial guidelines.

If you want to explore currently available funds and compare providers, you can also visit our ETF comparison page.

What Is a Halal ETF?

A halal ETF is an exchange-traded fund that invests in companies screened according to Islamic financial principles.

Like other ETFs, halal ETFs allow investors to buy a single fund that contains many different stocks. The difference is that the companies inside the fund are filtered using Sharia compliance guidelines.

Most halal ETFs apply two main types of screening.

Business activity screening

Companies are excluded if they operate in industries considered impermissible under Islamic principles.

• alcohol production or distribution
• gambling businesses
• pornography or adult entertainment
• pork-related products
• conventional financial services such as interest-based banking

Financial ratio screening

Companies must also meet certain financial criteria.

These rules typically limit the amount of interest-based debt a company can carry or the amount of income derived from interest.

By applying these screens, halal ETFs aim to create portfolios that align more closely with Islamic financial principles.

If you are new to investing in general, you may want to start with our guide on how Muslims can begin investing.

Is Investing in ETFs Halal?

The question of whether investing in stocks or ETFs is halal depends largely on the companies being invested in.

Many scholars consider stock investing permissible when the underlying businesses are engaged in permissible activities and when financial practices do not excessively rely on interest.

However, conventional index funds typically include companies involved in industries that do not meet Islamic screening standards.

For example, major stock indexes often include conventional banks, credit card companies, alcohol producers, and gambling companies.

Because of this, many Muslim investors prefer ETFs that specifically apply Sharia screening methods.

If you want a deeper explanation of this topic, see our guide on whether investing in the stock market is halal.

Best Halal ETFs Available to U.S. Investors

Several ETFs are commonly used by Muslim investors seeking Sharia-screened exposure to the stock market.

Below is a simplified overview of some of the most widely discussed halal ETFs.

Each of these funds applies a slightly different screening methodology, but they generally aim to remove companies involved in prohibited industries while limiting exposure to interest-based financial activity.

SPUS ETF Overview

One of the most widely known halal ETFs in the United States is SPUS (SP Funds S&P 500 Sharia Industry Exclusions ETF).

SPUS aims to track the performance of a Sharia-screened version of the S&P 500 index.

The fund removes companies involved in industries that conflict with Islamic financial principles and applies financial ratio screens to reduce exposure to companies heavily reliant on interest-based financing.

Because it is built from the S&P 500 universe, SPUS tends to include many large U.S. companies across industries such as technology, healthcare, industrials, and consumer sectors.

Many Muslim investors see SPUS as one of the closest equivalents to a halal version of a broad U.S. index fund.

You can read our full analysis here: SPUS ETF review.

HLAL ETF Overview

Another commonly discussed halal ETF is HLAL (Wahed FTSE USA Shariah ETF).

HLAL tracks an index designed to represent Sharia-compliant U.S. companies. The index removes companies involved in prohibited industries and applies financial screening rules similar to other Islamic investment funds.

Like SPUS, HLAL uses a passive investment strategy. This means the fund attempts to track the performance of its underlying index rather than actively selecting individual stocks.

Because of the Sharia screening process, HLAL may have different sector allocations compared with traditional stock index funds.

For example, the fund typically has little or no exposure to conventional financial institutions.

SPWO: Global Halal Equity ETF

SPWO is another ETF offered by SP Funds.

Unlike SPUS, which focuses on U.S. companies, SPWO provides exposure to international stocks outside the United States that pass Sharia screening criteria.

This makes SPWO a potential option for investors who want geographic diversification beyond U.S. markets.

By including companies from multiple regions, international halal ETFs may help investors build more globally diversified portfolios.

UMMA ETF Overview

UMMA is a global equity ETF offered by Wahed.

The fund tracks an index of Sharia-screened companies from both developed and emerging markets around the world.

Because it includes international exposure, UMMA may hold companies from regions such as Europe, Asia, and emerging markets.

For investors who want a single fund providing global diversification, funds like UMMA may be one option to consider.

SPSK: Sukuk ETF

SPSK is a different type of halal ETF compared with equity funds.

Instead of holding stocks, SPSK invests in sukuk, which are often described as Islamic financial certificates designed to comply with Sharia principles.

Sukuk are sometimes compared with bonds, although the structures differ in important ways.

Because of this structure, funds like SPSK may appeal to investors seeking income-focused investments rather than pure stock exposure.

Amana Mutual Funds

In addition to ETFs, some Muslim investors also use Amana mutual funds, which are among the longest-running Islamic investment funds available in the United States.

These funds are managed by Saturna Capital and apply Sharia screening rules to their investments.

Although they are mutual funds rather than ETFs, they are frequently discussed alongside halal ETFs because they provide similar types of Sharia-screened stock exposure.

Why Technology Stocks Often Dominate Halal ETFs

Many halal ETFs have a significant allocation to technology companies.

This happens because Sharia screening removes certain industries that make up large portions of conventional stock indexes.

For example, conventional financial institutions often represent a large share of standard indexes such as the S&P 500.

Because those companies are typically excluded from halal funds, other sectors such as technology and healthcare often make up a larger percentage of halal ETF portfolios.

This can cause halal ETFs to perform differently from traditional index funds in certain market conditions.

How to Choose a Halal ETF

Choosing a halal ETF involves several considerations.

Sharia screening methodology

Different funds may follow slightly different screening standards.

Diversification

Some funds focus only on U.S. companies, while others include global stocks.

Fees

Expense ratios can vary between ETFs and may impact long-term investment returns.

Investment goals

Some ETFs focus on growth through equities, while others may emphasize income through sukuk or other structures.

Because each investor's financial goals and risk tolerance differ, many Muslim investors choose a combination of funds to build a diversified portfolio.

Frequently Asked Questions

What is the best halal ETF?

There is no single ETF that is best for every investor. Funds such as SPUS and HLAL are widely discussed because they provide exposure to large U.S. companies screened according to Islamic principles.

Are halal ETFs truly Sharia compliant?

Halal ETFs apply screening methodologies designed to remove companies involved in prohibited industries and limit exposure to interest-based financial activity. However, individual investors may still review each fund's methodology and consult scholars if they have questions.

Can Muslims invest in ETFs long term?

Many Muslim investors use halal ETFs as part of long-term investment strategies, including retirement portfolios or diversified investment plans.

Do halal ETFs pay dividends?

Yes. Many ETFs distribute dividends based on the earnings of the companies they hold. Some investors choose to purify a portion of dividend income if necessary.

The Bottom Line

Halal ETFs provide Muslim investors with a way to participate in the stock market while attempting to follow Islamic financial principles.

By applying Sharia screening rules to exclude certain industries and limit excessive reliance on interest-based financing, these funds aim to create investment portfolios aligned with Islamic guidelines.

For many Muslims in the United States, halal ETFs such as SPUS, HLAL, and global Sharia-screened funds have become some of the most widely discussed tools for building long-term investment portfolios.

If you want to compare currently available funds, visit the our halal ETF comparison page.