Best Shariah Compliant & Halal ETFs And Index Funds Malaysia

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Halal ETFs in Malaysia:

Eq8 Dow Jones Islamic Market Malaysia Titans 25 ETF (0821EA) – invests in Malaysia’s 25 largest Shariah-compliant companies.
Eq8 MSCI Malaysia Islamic Dividend ETF (0824EA) – targets Malaysian Shariah stocks with strong dividend yields.
Eq8 MSCI SEA Islamic Dividend ETF (0825EA) – offers regional exposure to high-dividend Shariah stocks across Southeast Asia.
Eq8 FTSE Malaysia Enhanced Dividend Waqf ETF (0839EA) – combines halal investing with charitable giving through waqf contributions.
Eq8 Dow Jones Islamic Market U.S. Titans 50 ETF – provides access to 50 major U.S. Shariah-compliant companies.
VP‑DJ Shariah China A‑Shares 100 ETF (0838EA) – tracks the top 100 large-cap Chinese stocks screened for Shariah compliance.
TradePlus Shariah Gold ETF (0828EA) – a commodity ETF that reflects the price of physical gold in a halal-compliant structure.

Just like other halal investment options, halal ETFs in Malaysia screen out non-permissible sectors and follow strict rules on revenue and debt. Certified by the Shariah Advisory Council under the Securities Commission, they offer both local and international exposure. At the same time, for faith-conscious investors, halal index funds in Malaysia provide a reliable way to grow wealth while staying within Islamic investing principles. This overview highlights the best available halal ETFs and index funds in Malaysia, how they are structured, and what to look for when choosing one.

Risk warning: All investments carry risk, including potential capital loss. Economic fluctuations and market changes affect returns, and 40-50% of investors underperform benchmarks. Diversification helps but does not eliminate risks. Invest wisely and consult professional financial advisors.

Halal ETFs and index funds in Malaysia

Islamic ETFs (i‑ETFs) in Malaysia

Islamic ETFs in Malaysia are offered as i-ETFs, structured similarly to conventional exchange-traded funds with a passive investment approach. The key difference lies in their strict adherence to Islamic principles, halal ETFs track indices made up entirely of Shariah-compliant companies. A dedicated Shariah advisory committee oversees each fund, reviewing holdings and cleansing any income or elements that conflict with Islamic guidelines.

Bursa currently lists seven halal ETFs in Malaysia, which you can trade like regular stocks:

Eq8 Dow Jones Islamic Market Malaysia Titans 25 ETF (0821EA) – tracks the top 25 Shariah‑approved Malaysian large‑caps.

Eq8 Dow Jones Islamic Market Malaysia Titans 25 ETF performance

Eq8 MSCI Malaysia Islamic Dividend ETF (0824EA) – focuses on high‑dividend, Shariah‑compliant Malaysian stocks.

Eq8 MSCI Malaysia Islamic Dividend ETF performance

Eq8 MSCI SEA Islamic Dividend ETF (0825EA) – a regional Southeast Asia pick with Islamic dividend focus.

Eq8 MSCI SEA Islamic Dividend ETF performance

Eq8 FTSE Malaysia Enhanced Dividend Waqf ETF (0839EA) – shariah ETF that channels part of earnings to waqf (charity). Introduced in December 2024, EQ8WAQF incorporates a unique Waqf element within its income distribution structure. Under this feature, half of the distributed income goes to investors, while the other 50% is allocated as Waqf assets for charitable purposes.
Eq8 Dow Jones Islamic Market U.S. Titans 50 ETF – offers US equity exposure under Shariah guidelines.

Eq8 Dow Jones Islamic Market U.S. Titans 50 ETF performance

VP‑DJ Shariah China A‑Shares 100 ETF (0838EA) – tracks China A‑share Shariah‑compliant large‑caps.

VP‑DJ Shariah China A‑Shares 100 ETF performance

TradePlus Shariah Gold ETF (0828EA) – a shariah‑compliant commodity ETF tied to gold.

TradePlus Shariah Gold ETF performance

These ETFs offer exposure to diverse markets, from large-cap equities to physical gold, all while adhering to the strict screening processes used in Shariah compliant ETFs in Malaysia. The screening process for these instruments is rigorous and based on clear financial and sector-based criteria. Shariah boards review factors such as debt ratios, revenue sources, and core business activity. Index constituents are routinely updated to reflect mergers, delistings, or any compliance risks. Profits derived from non-compliant sources are identified and purified by being redirected to charitable causes, ensuring the fund remains ethically aligned.

Halal index funds in Malaysia

Among the various halal investment options in Malaysia, halal index funds provide exposure to equity markets without relying on active management or market predictions. A leading example is the PMB Shariah Index Fund, which allocates up to 99.5% of its capital to securities that meet Islamic screening criteria based on the FTSE Bursa Malaysia EMAS Shariah Index. The remaining balance is typically held in Islamic liquidity instruments, which help stabilize the portfolio during periods of market fluctuation. The fund adheres to a passive strategy, tracking its benchmark closely with no discretionary adjustments. It is one of several Shariah compliant halal index funds in Malaysia that appeal to investors seeking transparency and faith-based filters. The fund does not pursue tactical positioning or forecasting; it simply mirrors its benchmark, incorporating any changes that result from formal index reviews. This structure appeals to investors who value predictability and minimal human interference.

In addition to domestic benchmarks, the MSCI Malaysia Islamic Index serves as a globally recognized standard, capturing large- and mid-cap Malaysian equities that meet strict Shariah compliance. It’s widely used by institutional investors seeking diversified, ethical exposure to Malaysia’s Islamic equity market.

Islamic index funds in Malaysia
Investment fund	NAV (MYR)	Expense Ratio (%)	Dividend Yield (%)	YTD Return (%)	Volatility (Annualized Std Dev, %)
PMB Shariah Index Fund (tracks FBMSHA)	RM 0.5716	0.75 %	Cash distribution annually (e.g., 1.80 sen in 2022)	+11.14 %	Moderate (~6 %–9 % typical equity volatility)
MyETF MSCI Malaysia Islamic Dividend ETF	RM 1.095	0.51 %	1.07 %	–9.23 %	N/A (Benchmark’s 5 yr Std Dev ~17.9 %)
MSCI Malaysia Islamic Index (benchmark)	N/A	N/A	3.16 %	+5.04 %	17.88 % (5‑yr)

Pros and cons of Shariah-compliant investments

Built-in risk filters. Shariah screening avoids overleveraged companies and volatile financial stocks, reducing exposure to sudden market crashes.
Ethical plus financial discipline. Firms that qualify must avoid speculation and maintain transparency, often making them more financially sound than peers.
Better crisis resilience. During the 2008 crash, Shariah indexes outperformed many global indexes because they were shielded from high-risk banking exposure.
Hidden sector strengths. These investments often tilt toward real economy sectors like energy, healthcare, and industrials, giving stability over hype.

Missed tech and finance rallies. Shariah funds usually exclude major gainers like Apple (due to interest income) or banks, capping upside in bull runs.
Low dividend flexibility. Some funds must purify income or reject companies with small interest income, limiting high-dividend options.
Compliance costs eat returns. Frequent portfolio rebalancing to stay Shariah-compliant can lead to higher churn and transaction fees.
Global standard gaps. A stock might be halal in one region but non-compliant in another due to differing interpretations, confusing new investors.

How to start investing in halal ETFs and index funds

To begin investing in halal and Shariah-compliant instruments in Malaysia, follow these steps:

Open a Shariah-compliant trading account on Bursa Malaysia-i. Choose an Islamic broker registered with Bursa Malaysia-i. Set up a Central Depository System (CDS) account and a trading account through the broker. This gives you access to Shariah-compliant securities via approved Islamic channels.
Buy i-ETFs through your broker. Using your Islamic brokerage account, you can purchase i-ETFs.
Subscribe to index funds via FSMOne. The FSMOne platform provides access to Shariah-compliant index funds, including the PMB Shariah Index Fund. Minimum investments typically start from RM100, making them accessible to individual investors.
Use Wahed Invest for automated Shariah investing. Wahed Invest is a Shariah-compliant robo-advisor offering diversified portfolios based on screened ETFs. The minimum investment is RM100. Registration is fully online, and all portfolios are subject to regular Shariah audits.

If you’re also interested in other halal investment options in Malaysia, please refer to our guides:

Further, if you're interested in expanding beyond Shariah-compliant ETFs and index funds in Malaysia, there’s a growing global landscape of halal investment opportunities to explore. From equities and commodities to Forex and crypto, many international platforms now offer Islamic trading accounts that are structured to avoid interest, excessive uncertainty, and unethical sectors. These options are designed to align with Islamic financial principles while giving you broader exposure. If that aligns with your goals, consider the curated list of halal-compliant platforms below to find one that matches your investment approach.

Best brokers that offer Islamic account
	Currency pairs	Min. deposit, $	Regulation	TU overall score	Open an account
zForex	50	10		7.89	Go to broker Your capital is at risk.
FOREX.com	80	100	CIMA, FCA, FSA (Japan), NFA, IIROC, ASIC, CFTC	6.82	Study review
XM	57	5	CySEC, FSC (Belize), DFSA, FSCA, FSA (Seychelles), FSC (Mauritius), SCA (United Arab Emirates), CMA (Kenya)	9.3	Go to broker Your capital is at risk.
OANDA	68		FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA	6.87	Go to broker Your capital is at risk.
Plus500	60	100	CySEC, FCA, ASIC, FMA, FSCA, FSA Seychelles, EFSA, MAS, DFSA, SCB	7.54	Go to broker 80% of retail CFD accounts lose money.

Earn consistent passive income by combining Malaysia’s halal ETFs with dividend reinvestment strategies

Many people new to halal investing in Malaysia think it's just about avoiding banks or alcohol stocks. But what really makes a difference is choosing funds that focus on steady, halal-friendly sectors like utilities or essential goods, and that automatically reinvest dividends. That quiet reinvestment means your returns keep building on themselves over time. You're not just putting money away, you're setting up a steady and ethical growth path that does the work for you.

Here’s something else most beginners miss, these Shariah-compliant ETFs and index funds can actually make your zakat process much easier. Because they already avoid interest-based or questionable income, your annual zakat calculation becomes simpler and cleaner. Some funds even give you ready-made zakat reports, which means you don’t have to worry about doing the math yourself. So not only do you stay compliant financially, but you also stay spiritually clear, and that’s a win on both fronts.

Conclusion

Malaysia offers three categories of Shariah-compliant investment instruments: i‑ETFs, index funds, and robo-advisor portfolios. Each operates under a defined structure with its own screening methodology and regulatory framework. i‑ETFs are exchange-traded, index funds are accessible via subscription platforms, and robo-advisors use model portfolios built from pre-screened assets. This article outlines the composition, screening process, and management structure of each option. Examples are provided to support comparisons of returns, fees, and exposure-related risks. Investors should verify current fund documentation and compliance status through official sources before allocating capital.

FAQs

Can Shariah-compliant funds be used in portfolios with regular payouts?

Yes, many such funds distribute dividends or profit income. Non-compliant portions are purified, and the remaining income can be used for regular withdrawals.

How can investors verify that a fund remains Shariah-compliant after purchase?

Investors should monitor official Shariah board updates and fund reports. Fund managers are required to disclose structural changes and purification actions.

Are Shariah index strategies suitable for short-term trading?

No. These funds are designed for passive allocation, have low turnover, and follow fixed rebalancing schedules, making them unsuitable for speculative strategies.

Are there currency limitations when purchasing Shariah-compliant funds?

Yes. Some funds are denominated in foreign currencies, which introduces exchange rate risk and may result in additional conversion costs.

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Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data.

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