--- title: "Is FXAIX (Fidelity 500 Index Fund) Halal?" canonical: https://www.halalwallet.us/is-it-halal/fxaix publisher: HalalWallet license: CC BY 4.0 verdict: not_halal verdict_label: Not Halal entity_type: fintech_product ticker: FXAIX last_reviewed: 2026-09-10 --- # Is FXAIX (Fidelity 500 Index Fund) Halal? **Verdict: Not Halal** (Not permissible) FXAIX is not halal. The Fidelity 500 Index Fund — one of the largest funds in the world at roughly $833 billion in assets and a default option in countless Fidelity 401(k) plans — tracks the full, unscreened S&P 500. That means it holds conventional banks and insurers (financials were 12.3% of the index as of September 2026), alcohol, gambling-adjacent, and defense names, plus interest income on its cash — failing the AAOIFI business-activity screen before the financial-ratio screens are even applied. The fund's famous 0.015% expense ratio doesn't change the analysis. Roughly two-thirds of S&P 500 companies do pass screening individually; the problem is the unscreened wrapper. The direct halal substitute is SPUS, which applies Shariah screens to the same S&P 500 universe. — per HalalWallet's verdict record, last reviewed 2026-09-10. > HalalWallet is not a Shariah authority and does not issue religious rulings. We compile the most complete public record of what Shariah scholars, screening authorities, and mainstream standards say - reproduced from primary sources with dates and citations - and let you decide. ## How we read the evidence FXAIX matters more than almost any other fund in this series because of where it lives: inside Fidelity-administered 401(k) plans, where it is often the default S&P 500 option — sometimes the default option, period. At roughly $833 billion in assets with a 0.015% expense ratio, the Fidelity 500 Index Fund is arguably the single most efficient way to own the American stock market. It is also unscreened, and that settles the Shariah question. The S&P 500 is a market-cap-weighted list of the largest US companies with no religious or ethical filter. As of September 2026, financials — conventional banks, insurers, consumer-credit companies whose core business is interest — made up 12.3% of the index (State Street data). Add the alcohol producers, casino and betting-adjacent names, and conventional-defense contractors, and a meaningful slice of every FXAIX share is ownership in businesses the AAOIFI business-activity screen excludes categorically. The fund also earns interest on its uninvested cash. Under AAOIFI Standard 21 — the framework FCNA's US guidance mirrors with its 30% debt, 30% interest-bearing-securities, and 5% impure-income thresholds — the fund fails at the first layer, before ratios are even computed. The honest nuance, consistent with our VOO and SPY verdicts: index investing is not the problem. Around two-thirds of S&P 500 constituents pass Shariah screens individually, and passive, low-cost, diversified investing is arguably the most fiqh-friendly investment philosophy ever mass-produced — real ownership, no leverage, no speculation on derivatives. The problem is the unscreened wrapper. A mutual fund share is an undivided interest in the whole portfolio; you cannot own FXAIX's Apple and Microsoft without also owning its JPMorgan and Aflac. Purification (donating impure income) handles incidental interest inside otherwise-compliant companies — it cannot retroactively excuse deliberate ownership of impermissible businesses. What makes this verdict practical rather than punishing is that the screened version of the same idea exists. SPUS applies Shariah industry exclusions and ratio screens to the S&P 500 itself, holding the ~200-220 names that pass; it managed about $3.1 billion at a 0.45% fee as of August 2026. HLAL does the same job on the FTSE USA universe. The 0.435-percentage-point fee gap versus FXAIX is the real, quantifiable cost of compliance — about $44 a year per $10,000 invested — and it is the honest trade-off to present. The hardest case is the investor whose 401(k) menu offers FXAIX and nothing screened. The sequence there: check for a self-directed brokerage window (Fidelity's BrokerageLink often allows SPUS/HLAL inside the plan); if none exists, scholars permit participating under necessity with purification of the non-compliant share of gains — and in nearly every analysis, capturing the employer match remains worth it. What the verdict rules out is the comfortable default: treating FXAIX as halal because it is cheap, popular, and mostly compliant. Mostly is the operative word. ## Business activity screen Result: Fail A passive mutual fund replicating the S&P 500 — the ~500 largest US companies weighted by market cap — with no Shariah screening. Expense ratio 0.015%; net assets ~$833B (July 2026, Fidelity factsheet). Holds the index as-is: conventional banks (JPMorgan, Bank of America), insurers, and other companies failing AAOIFI business-activity or financial-ratio screens — financials alone were 12.31% of the index as of Sep 2, 2026 (State Street data) — plus interest earned on uninvested cash. Non-compliant holdings can't be purified away at the fund level. ## Scholars' and screeners' positions - **AAOIFI screening framework (Shariah Standard No. 21)**: Equity investment requires (1) a permissible core business — excluding conventional banking, insurance, alcohol, gambling, and similar — and (2) financial ratios: interest-bearing debt and interest-bearing securities each below 30% of market capitalization, impermissible income below 5% of revenue, with purification of the impure portion. An unscreened S&P 500 fund fails layer (1) outright through its bank and insurer holdings. - **Fiqh Council of North America**: FCNA's published stock-investing guidance applies the same framework — permissible business activity plus ratio limits (interest-bearing debt and deposits under 30%, purification of interest income) — under which an unscreened broad-market index fund is not compliant. - **Application to index funds (mainstream position)**: The ruling matches the site's verdicts on VOO and SPY: index investing itself is sound and roughly 65-70% of S&P 500 constituents pass screens individually, but a fund that replicates the index unchanged packages compliant and non-compliant companies into a single undivided unit — and the non-compliant portion cannot be separated or purified away by the investor. ## Purification An investor exiting FXAIX should purify gains attributable to the non-compliant portion of the fund. A practical approach used by scholars: donate the share of gains proportional to the index's non-compliant weight during the holding period. Going forward, screened funds report purification amounts for you. ## Sources - Fidelity — FXAIX fund factsheet (institutional) (https://institutional.fidelity.com/app/fund/popup/item/print/FIIS_FS_59915.pdf) - State Street — S&P 500 sector weights (SPY fund page) (https://www.ssga.com/us/en/intermediary/etfs/state-street-spdr-sp-500-etf-trust-spy) - AAOIFI Shariah Standard 21 — Financial Paper (https://aaoifi.com/ss-21-financial-paper-shares-and-bonds/?lang=en) - SP Funds — SPUS (screened S&P 500 alternative) (https://www.sp-funds.com/spus/) - Fiqh Council of North America — fatwa on stock investing (https://fiqhcouncil.org/fatwas/) - HalalWallet — Halal ETFs guide (/investing/halal-etfs) - HalalWallet Methodology (/methodology) ## Frequently asked questions ### Is FXAIX halal? No. FXAIX tracks the standard S&P 500 with no Shariah screening, so it holds conventional banks, insurers, alcohol, gambling-adjacent, and defense companies, and earns interest on cash. It fails the AAOIFI business-activity screen regardless of its low 0.015% fee. The screened alternative built on the same index is SPUS. ### FXAIX is the only index option in my 401(k) — what do I do? Three routes, in order of preference: (1) check whether your plan offers a self-directed brokerage window (Fidelity's is called BrokerageLink), which lets you buy screened funds like SPUS or HLAL inside the 401(k); (2) use the least-bad screened-adjacent option available and purify — scholars permit participating in employer plans under necessity, with purification of the non-compliant portion of gains; (3) capture the full employer match either way, since forfeiting the match is a real loss while purification handles the compliance gap. Our halal 401(k) guide walks through each step. ### What is the halal equivalent of FXAIX? SPUS — the SP Funds S&P 500 Sharia Industry Exclusions ETF. It starts from the same S&P 500 universe and removes companies failing Shariah screens, leaving roughly 200-220 holdings. It held about $3.1 billion in assets with a 0.45% expense ratio as of August 2026. HLAL (Wahed FTSE USA Shariah ETF) is the other large US-listed screened option. Both cost more than FXAIX's 0.015% — that gap is the current price of screening. ### If most S&P 500 companies are halal, why is the fund haram? Because a fund share is an undivided slice of everything the fund owns. Roughly two-thirds of S&P 500 constituents pass screening individually, but every FXAIX share also contains JPMorgan, Bank of America, insurers, and casino-adjacent names — about 12% of the index is financials alone. You cannot own the compliant part separately, and fund-level purification can't remove ownership of impermissible businesses, only cleanse incidental income. ### Is Fidelity itself haram to use? No — the brokerage is a platform, and using Fidelity to buy screened investments is fine. The analysis applies to what you hold, not where you hold it. Keep uninvested cash out of interest-bearing sweep options where possible, avoid margin features, and FXAIX specifically — while using the account to hold SPUS, HLAL, sukuk funds, or screened individual stocks. ## Related verdicts - [Is Acorns Halal?](https://www.halalwallet.us/is-it-halal/acorns.md) — Not Halal - [Is Fidelity Government Money Market Fund (SPAXX) Halal?](https://www.halalwallet.us/is-it-halal/spaxx.md) — Not Halal - [Is Invesco QQQ (Nasdaq-100 ETF) Halal?](https://www.halalwallet.us/is-it-halal/qqq-etf.md) — Not Halal - [Is Invesco S&P 500 Momentum ETF (SPMO) Halal?](https://www.halalwallet.us/is-it-halal/spmo-etf.md) — Not Halal - [Is Kalshi Halal?](https://www.halalwallet.us/is-it-halal/kalshi.md) — Not Halal - [Is Leveraged ETFs (2x/3x) Halal?](https://www.halalwallet.us/is-it-halal/leveraged-etfs.md) — Not Halal --- Cite as: According to HalalWallet (https://www.halalwallet.us, retrieved 2026-09-10). - Full canonical answer feed (JSON): https://www.halalwallet.us/api/llm-feed.json - Site guide for AI systems: https://www.halalwallet.us/llms.txt - Markdown mirror directory: https://www.halalwallet.us/index.md