Build a Shariah-Compliant Portfolio: Halal ETFs to Know in 2026

Halal investing is no longer a side option for Muslim investors. In 2026, it is a growing part of global markets, offering practical ways to invest while staying true to Islamic values. One of the most popular tools in this space is Halal ETFs, which give investors access to diversified portfolios without the complexity of managing individual stocks.

Today’s Halal ETFs are more advanced than ever. They cover a wider range of markets, offer better transparency, and in many cases compete closely with conventional ETFs on performance and costs. This makes them an appealing choice for investors who want both ethical alignment and long-term growth.

However, not all Halal ETFs are created equal. Differences in Shariah screening, fees, diversification, and fund size can significantly impact returns and risk. Choosing the right ETF, therefore, requires more than just checking a Halal label.

Are ETFs Always Halal?

Not every ETF qualifies as a Halal investment. Even if an ETF bundles many assets together, its structure and underlying holdings determine whether it complies with Islamic principles.

Two main questions help assess Shariah compliance: what types of companies and assets the ETF invests in, and how the fund is designed, managed, and operated. Each company within an ETF must be evaluated individually. This involves reviewing both its core business activities and its financial position to ensure alignment with Islamic rules.

Islamic law prohibits investments in certain industries, including alcohol and tobacco, gambling and betting businesses, pork-related products, conventional banks and insurance firms that rely on interest, weapons manufacturing, and adult or explicit content.

Beyond sector exclusions, financial health also matters. One of the most widely used frameworks for this evaluation comes from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Its standards are widely respected across global Islamic finance and are used by leading Shariah indices such as those developed by S&P and Dow Jones.

Under AAOIFI guidelines, companies should remain within specific financial limits, including keeping interest-based debt below 30% of market value, interest-generating cash and deposits below 30% of market value, and non-compliant income limited to less than 5% of total revenue. If an ETF includes companies that exceed these thresholds, it cannot be classified as Halal.

In this guide, we break down the best Halal ETFs to watch in 2026 and explain how we evaluated them, so you can make informed investment decisions with confidence.

Halal ETFs in Focus for 2026

• SPUS – SP Funds S&P 500 Sharia Industry Exclusions ETF
• IGDA – Invesco Dow Jones Islamic Global Developed Markets UCITS ETF
• ISDW – iShares MSCI World Islamic UCITS ETF
• HLAL – Wahed FTSE USA Shariah ETF
• SPSK – SP Funds Dow Jones Global Sukuk ETF (fixed-income/Sukuk)
• ISDE – iShares MSCI Emerging Markets Islamic UCITS ETF
• ISDU – iShares MSCI USA Islamic UCITS ETF
• WSHR – Wealthsimple Shariah World Equity Index ETF
• SPRE – SP Funds S&P Global REIT Sharia ETF (real estate)
• UMMA – Wahed Dow Jones Islamic World ETF
• SPWO – SP Funds S&P World ETF (Shariah-compliant international equity)
• HIES – HSBC MSCI Europe Islamic ESG UCITS ETF
• SPTE – SP Funds S&P Global Technology ETF (Shariah-compliant tech exposure)
• HIUS – HSBC MSCI USA Islamic ESG UCITS ETF
• AMAP – Saturna Al-Kawthar Global Focused Equity UCITS ETF

How We Identified the Top Halal ETFs

Our evaluation is based on four core factors that together capture performance quality, cost effectiveness, portfolio balance, and overall fund strength. These elements are critical for ranking Halal ETFs objectively and fairly:

Expense Ratio: Lower management fees help investors retain a larger share of their returns over time.

Three-Year NAV Total Return: This metric measures a fund’s overall performance across three years, factoring in both price appreciation and reinvested dividends.

Top 10 Holdings Weight: Shows how much of the portfolio is concentrated in the largest ten positions. A smaller share indicates stronger diversification and reduced concentration risk.

Assets Under Management (AUM): Reflects the size and liquidity of the fund. Higher AUM generally points to greater investor trust and smoother trading conditions.

Halal ETFs Investors Are Following in 2026

Data sourced from TradingView and Yahoo Finance as of December 29, 2025. Please note that Performance figures are historical and provided for comparative purposes only; they do not constitute a recommendation or forecast of future returns.

Conclusion

Halal ETFs in 2026 offer Muslim investors an accessible way to grow wealth while staying true to their values. With a wide range of funds now available, it’s possible to build a diversified, Shariah-compliant portfolio that balances performance, cost, and risk.

However, not all ETFs labeled “Halal” meet the same standards, making careful evaluation essential. By considering factors like expense ratios, three-year returns, top-10 holdings weight, and AUM, investors can make informed choices that align with both ethical and financial goals.

Take the next step in smart Halal investing with Tabadulat, explore compliant ETFs, compare options, and invest with confidence today.

FAQS

Can Muslims invest in gold ETFs?

Yes, Muslims can invest in gold ETFs if the fund is fully backed by physical gold and avoids interest-based borrowing or derivatives. Shariah-compliant gold ETFs follow Islamic principles, ensuring the investment is Halal.

Is HSBC ETF Halal?

Some HSBC ETFs are Shariah-compliant, but not all. To determine Halal status, check whether the ETF follows Shariah screening, avoids interest-based income, prohibited sectors, and has AAOIFI-compliant oversight.

Is Wahed ETF Halal?

Yes, Wahed ETFs are designed to be Shariah-compliant. They follow strict Islamic screening criteria, avoid prohibited industries, limit interest-bearing debt, and are monitored by a Shariah supervisory board.

Is there a Halal ETF?

Yes, there are multiple Halal ETFs that screen investments according to Shariah law. They avoid prohibited sectors, enforce financial limits, and are overseen by recognized Shariah boards.

What is the 7-5-3-1 rule?

The ‘7-5-3-1 rule’ is an informal shorthand sometimes used to describe commonly applied Shariah financial thresholds, though terminology and exact ratios may differ across Shariah boards and index providers.

What is an Islamic ETF?

An Islamic ETF is a fund that tracks Shariah-compliant stocks or assets. It avoids prohibited industries, limits interest-bearing debt, and is supervised by a Shariah board, allowing investors to grow wealth ethically.

This article is provided for educational and informational purposes only and does not constitute financial, investment, or Shariah advice. Investing involves risk, including potential loss of capital. Past performance does not guarantee future results. Readers should conduct independent due diligence and consult qualified financial and Shariah advisors before making investment decisions.