Top Halal ETFs And Index Funds In The USA

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The best halal ETFs and index funds in the USA include:

SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS) – mirrors the S&P 500 but excludes entire non-compliant sectors like conventional finance. A strong choice for value-focused investors seeking broad U.S. exposure.
Wahed FTSE USA Shariah ETF (HLAL) – tracks the FTSE USA Shariah Index, covering large-cap U.S. stocks that meet strict Shariah screening. Beginner-friendly, interest-free growth exposure.
SP Funds Dow Jones Global Sukuk ETF (SPSK) – invests in a diversified portfolio of global sukuk (Islamic bonds), offering stable, Shariah-compliant fixed income.
SP Funds S&P Global REIT Sharia ETF (SPRE) – provides exposure to Shariah-compliant real estate investment trusts worldwide, with a focus on property-based income.
Wahed Dow Jones Islamic World ETF (UMMA) – tracks global Shariah-compliant equities, offering diversified exposure beyond the U.S. market.
Iman Fund (IMANX) – an index-oriented mutual fund that combines U.S. equities and sukuk, actively overseen for Shariah compliance. Suited for long-term, faith-aligned portfolios.

With ethical investing on the rise, many are exploring halal investment options that balance faith and long-term financial growth. The variety of choices now available, such as a halal ETF in the USA or a Shariah-compliant mutual fund, allows investors to participate in the U.S. markets without compromising on religious principles. As more people look to invest responsibly, halal index funds and ETFs in the USA are emerging as a go-to solution for building a diversified and values-aligned portfolio.

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.

What makes ETFs and index funds halal?

Many investors assume halal investing just means avoiding alcohol and gambling, but the real filters behind a Shariah compliant ETF or index fund in the USA go much deeper.

Debt ratio matters. For an ETF to be Shariah-compliant, companies inside it must typically keep total debt below one-third of their market cap.
Interest income cap is strict. If a company earns more than 5 percent of its revenue from interest, it’s filtered out in most Islamic ETF in USA screens.
Cash must stay productive. Too much idle cash is non-compliant. Companies need to actively use their cash for business growth, not just sit on it.
The purification process is non-optional. Even if a stock passes all filters, any interest-based earnings must be donated. Good Shariah ETF in USA platforms explain how this is done.
Business activity is not the only test. Some funds also look at governance, ESG scores, and supply chains. A company might be halal on paper but ethically questionable.
Rebalancing is Shariah-sensitive. Shariah funds must reassess regularly. If a company’s financials shift mid-year, the ETF must divest it even if it was clean earlier.
Regional scholars may disagree. One ETF might be considered halal in the U.S. but not in GCC regions, due to differences in interpretation or screening tools.
Passive doesn't mean careless. While these ETFs may follow indexes, the screening requires active oversight to stay aligned with Shariah over time.

Key differences between halal ETFs and halal index funds

While both Halal ETFs and Halal Index Funds aim to deliver market returns in line with Shariah principles, they differ in structure, trading mechanics, and operational details. Understanding these differences can help Muslim investors choose the product that best matches their investment goals, risk tolerance, and liquidity needs. The table below outlines the key distinctions:

Halal ETFs vs halal index funds
Feature	Halal ETF	Halal Index Fund
Trading & Liquidity	Trades on exchanges like a stock throughout the day; intraday pricing and liquidity.	Priced once per day after market close; trades executed at end-of-day NAV.
Rebalancing Frequency	Often rebalances more frequently to maintain Shariah compliance when financial ratios change.	Follows a set rebalancing schedule (e.g., quarterly/semiannual) that may be less responsive to changes.
Shariah Screening Methodology	Applies Shariah screens; criteria vary by fund provider (e.g., 20% vs 30% debt threshold).	Also applies Shariah screens with similar variations, but index rules may be less actively monitored between rebalances.
Cash Purification	Actively purifies interest-based income before distributing returns.	May purify cash flows, but practices can be less frequent or vary by provider.
Index Construction	Often tracks a custom Shariah-compliant index, sometimes narrower and sector-focused.	May track a broad Shariah index or a custom one, but usually follows more traditional index-building rules.
Sector Exposure	Excludes prohibited sectors (finance, alcohol, gambling, etc.); often heavier in tech, healthcare, and energy.	Same exclusions, with sector weights depending on the tracked index.
Shariah Oversight	Usually has a Shariah advisory board reviewing holdings quarterly or semiannually.	May have similar oversight, but reviews can be less frequent or less visible.

Best halal ETFs in the USA (2026)

The U.S. halal investment market is still relatively small, but it offers a growing range of Shariah-compliant products for Muslim investors. Almost all U.S.-listed halal funds are index-based ETFs, designed to track benchmarks that exclude prohibited sectors such as conventional finance, alcohol, and gambling. There is also one notable mutual fund – the Iman Fund – that follows an index-oriented Shariah strategy.

The table below highlights the most prominent halal ETFs and index-oriented funds available to American investors in 2026, along with their structure, Shariah oversight, costs, and investment focus.

Best halal ETFs in the USA
Fund Name	Ticker	Fund Type	Provider	Shariah Board	Expense Ratio	Index Tracked / Focus	Focus
SP Funds S&P 500 Sharia Industry Exclusions ETF	SPUS	ETF	SP Funds	Shariyah Review Bureau	0.45%	S&P 500 Sharia Industry Exclusions Index	Broad U.S. large-cap equities, excluding prohibited sectors
Wahed FTSE USA Shariah ETF	HLAL	ETF	Wahed Invest	Straightway Ethical Advisory	0.50%	FTSE USA Shariah Index	Broad U.S. large-cap equities with Shariah compliance
SP Funds Dow Jones Global Sukuk ETF	SPSK	ETF	SP Funds	Shariyah Review Bureau	0.50%	Dow Jones Sukuk Total Return Index	Global sukuk (Islamic bonds)
SP Funds S&P Global REIT Sharia ETF	SPRE	ETF	SP Funds	Shariyah Review Bureau	0.69%	S&P Global Shariah REIT Index	Global Shariah-compliant real estate
Wahed Dow Jones Islamic World ETF	UMMA	ETF	Wahed Invest	Straightway Ethical Advisory	0.65%	Dow Jones Islamic Market World Index	Global Shariah-compliant equities
Iman Fund	IMANX	Mutual Fund (Index-Oriented)	Allied Asset Advisors	FIqh Council of North America	1.00%	Proprietary index-oriented strategy	Diversified U.S. equities & sukuk, Shariah-screened

International halal ETFs and index funds accessible to U.S. investors

American investors also can access several international Shariah-compliant ETFs and index funds through global brokerage accounts. These products offer diversified exposure to developed, emerging, or single-country markets while adhering to Islamic principles.

International halal ETFs and index funds
Fund Name	Fund Type	Provider	Focus
iShares MSCI World Islamic UCITS ETF	ETF	iShares	Global developed market equities, Shariah-screened
iShares MSCI Emerging Markets Islamic UCITS ETF	ETF	iShares	Broad emerging markets, Shariah-compliant
Wahed MSCI Emerging Markets Islamic ETF	ETF	Wahed Invest	Emerging market equities meeting Shariah criteria
FTSE Shariah Global Equity Index Fund	Index Fund	FTSE Russell (via global platforms)	Diversified global equities following Shariah guidelines
MSCI ACWI Islamic Index Fund	Index Fund	MSCI (via select providers)	Global all-country equities, Shariah-compliant
S&P Global 1200 Shariah Index Fund	Index Fund	S&PDow Jones Indices	Global large- and mid-cap equities excluding prohibited sectors

Note: Availability depends on the brokerage platform and regulatory access. UCITS ETFs and certain index funds may require accounts with international trading capabilities or offshore investment platforms.

If you wish to invest in any of the funds/ETFs listed above, you would need to open an account with a broker that offers Islamic accounts. Some of the notable options that fit this criteria are listed in the table below:

Best Shariah-compliant brokers that offer ETFs and Indices investing
	Min. deposit, $	Regulation	TU overall score	Open an account
Plus500	100	CySEC, FCA, ASIC, FMA, FSCA, FSA Seychelles, EFSA, MAS, DFSA, SCB	7.54	Go to broker 80% of retail CFD accounts lose money.
OANDA		FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA	6.86	Go to broker Your capital is at risk.
FOREX.com	100	CIMA, FCA, FSA (Japan), NFA, IIROC, ASIC, CFTC	6.83	Study review
XM	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.
Pepperstone		ASIC, FCA, DFSA, BaFin, CMA, SCB, CySec	9.25	Go to broker Your capital is at risk.

How to choose the best halal ETF or index fund in the U.S.?

A Guide to Selecting the Best Halal ETFs and Index Funds in the U.S.

Here’s how to evaluate and choose the right halal ETF or index fund in the U.S. if you’re starting out and want more than just surface-level filters.

Check who sits on the Shariah board. Some ETFs have globally respected scholars while others rely on internal panels with little transparency.
Look beyond the name. Many funds labeled as Islamic may hold borderline stocks that pass one standard but not another.
Track how often the fund is reviewed. The best Shariah compliant ETFs in the U.S. have quarterly reviews and real-time monitoring, not annual check-ins.
Understand the purification method. Each ETF handles non-compliant income differently. Look for ones that fully purify rather than just donate profits.
Compare the sector exposure. Some ETFs lean heavily toward tech or healthcare. A solid Shariah compliant ETF in the U.S. will avoid overconcentration.
Review dividend policy and payout track record. Even the best halal ETF in the USA may pay lower dividends due to filtering out high-interest firms.
See how closely it tracks its index. If the ETF lags behind its benchmark too much, you're paying more in fees than you're gaining in faith-based value.

If apart from ETFs and index funds, you are also interested in investing in other halal investment options available in the USA, we suggest you to explore our other guides listed below:

Boost returns with low-volatility halal ETF strategies and smart dividend reinvestment in the U.S.

If you’re investing in a halal ETF in the U.S., don't just look at sector exclusion, focus on volatility metrics. Many Islamic ETF in U.S. options screen out financial and alcohol sectors, but few beginners explore how their beta scores behave in choppy markets. Funds with consistently lower beta often outperform in downturns and recover faster. Pairing these with a broader portfolio of low-correlation Islamic funds can smooth out returns over time while staying Shariah-compliant.

Another powerful but underused strategy is setting up dividend reinvestment plans (DRIPs) within halal ETFs, especially those with a consistent payout track record. Many investors withdraw their halal ETF earnings or let them sit idle, missing out on compounding growth. Reinvesting dividends within the same halal ETF in the U.S. not only boosts long-term gains but keeps your investments aligned with Islamic principles without the need for frequent manual checks or rebalancing.

Conclusion

Halal ETFs and index funds offer Muslim investors in the U.S. a reliable path to building wealth ethically. Whether you prefer ETF-style trading flexibility or mutual fund stability, there are credible options that align with Islamic principles. Always verify the Shariah compliance of each fund and aim for diversified, long-term growth.

FAQs

What happens if a company in a halal ETF becomes non-compliant midway through the year?

Most Shariah-compliant ETFs rebalance quarterly or semi-annually. If a company’s financials change and it no longer meets Shariah criteria, the fund is required to divest it during the next screening. Some funds even have “trigger rules” for urgent removal.

Can halal ETFs pay dividends, and are those halal too?

Yes, many halal ETFs pay dividends. These payouts are typically “purified,” meaning any non-compliant income (like interest) is calculated and removed before reaching investors. The fund’s purification method should always be publicly disclosed.

Are halal ETFs tax-efficient for U.S. investors?

Yes, ETFs are generally more tax-efficient than mutual funds because of their structure. Halal ETFs also benefit from this. However, dividend income is still taxable under U.S. law, even if it’s Shariah-compliant.

Are there options for both passive and active styles in halal investing?

Yes. While most Shariah compliant index funds in U.S. and Islamic index funds in U.S. follow passive strategies, there are also active mutual funds like the Amana series that apply Shariah principles but make selective investment decisions based on performance and values.

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Alamin Morshed is a contributor at Traders Union. He specializes in writing articles for businesses that want to improve their Google search rankings to compete with their competition.

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Andreas Kristo Saragih is a seasoned equity research analyst with over a decade of experience across both buy-side and sell-side roles, focused on the Indonesian capital market. He has extensive sector coverage, including banking, consumer goods, retail, real estate, healthcare, transportation, poultry, cement, pharmaceuticals, construction, and infrastructure.

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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