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Halal ETFs, Compared
Lesson 1 introduces two pre-screened halal ETFs as the simplest entry point into Sharia-compliant investing. Here they are side by side — what they share, where they differ, and how to evaluate any halal ETF before you buy.
HLAL
Wahed FTSE USA Shariah ETF
- Provider
- Wahed
- Universe
- US stocks from the FTSE USA index universe
- Screening
- AAOIFI-style: ~30% debt & cash screens, ~5% impure-income tolerance
SPUS
SP Funds S&P 500 Sharia Industry Exclusions ETF
- Provider
- SP Funds
- Universe
- The S&P 500, with Sharia industry exclusions applied
- Screening
- AAOIFI-style: ~30% debt & cash screens, ~5% impure-income tolerance
Side by side
| HLAL | SPUS | |
|---|---|---|
| Full name | Wahed FTSE USA Shariah ETF | SP Funds S&P 500 Sharia Industry Exclusions ETF |
| Fund provider | Wahed | SP Funds |
| Starting universe | US stocks from the FTSE USA index universe | The S&P 500, with Sharia industry exclusions applied |
| Screening approach | AAOIFI-style methodology, including the ~30% debt/cash screens and the ~5% impure-income screen | AAOIFI-style methodology, including the ~30% debt/cash screens and the ~5% impure-income screen |
| Research burden on you | Low — the screen is applied across the whole basket for you | Low — the screen is applied across the whole basket for you |
The practical difference between them is the starting universe each fund screens: HLAL draws from the FTSE USA index family, while SPUS starts from the S&P 500 and removes the excluded industries. Both then apply AAOIFI-style financial screens to what remains.
What a halal ETF buys you
The screening is done across the whole basket
Both funds are pre-screened using AAOIFI-style methodology — the same ~30% interest-bearing debt and cash ratios and ~5% impure-income tolerance you learn to apply by hand in Lesson 2 — so every holding has already been through the screen.
Instant diversification kills company-specific risk
Holding one company exposes you to unsystematic risk — a product recall, a scandal, a failed drug. A broad basket mathematically neutralizes those uncorrelated, company-specific events. What remains is market-wide (systematic) risk: the risk you're actually paid a long-term premium to bear.
The price stays glued to the holdings' value
Institutional "authorized participants" continuously create and redeem ETF shares in large blocks, arbitraging away any gap between the fund's market price and the value of what it holds. You never touch that machinery — you just benefit from an honest price.
Costs are small, but not zero
Unlike owning stocks directly, an ETF charges an annual expense ratio — a small percentage of your investment. Broad passive index ETFs often charge under 0.05% a year; check each fund's current expense ratio in its official fact sheet before buying, since fees compound against you just like returns compound for you.
Before you buy any halal ETF
- Verify the fund's current compliance status with a dedicated Sharia screener (Zoya, Islamicly, or Musaffa — see Lesson 4).
- Check the fund's current expense ratio and holdings in its official fact sheet — those change over time and aren't covered by this course.
- Remember what diversification can't remove: market-wide risk. A halal ETF can still fall 20%+ in a bear market — Lesson 5 is about surviving exactly that.
- Halal ETFs and individually screened stocks aren't rivals — many investors start with an ETF core and add personally screened companies (Lessons 2–3) as their confidence grows.
HLAL and SPUS are the two halal ETFs covered in this course's written materials — this page compares what the course covers, not the entire market. Other Sharia-compliant funds exist; run any of them through a screener and its own fact sheet using the checklist above. Educational content only — not financial advice.