What it means in practice — the rules, the screening criteria, and the products available today.
Islamic investing comes down to a few straightforward rules:
These are not arbitrary restrictions. They point toward equity in real businesses over financial engineering, and toward industries that contribute rather than harm.
Before screening ratios and ETF structures, there is a more fundamental question: what types of investment are themselves permissible? Scholars have reached broad consensus on three categories. Everything else flows from these foundations.
This is the most original and unambiguous form of halal investing. The contracts underlying it are musharaka (joint ownership — all partners share profit and loss in proportion to their stake) and mudaraba (profit-sharing — one party provides capital, the other provides expertise and management). In both structures the investor bears real risk: there is no guaranteed return, no interest, no separation between the investor and the outcome of the business.
Buying shares in a screened company or a halal equity ETF is an extension of this principle. As a shareholder you are a fractional owner of a real business — you receive a share of profits through dividends and capital appreciation, and you absorb losses when the business performs poorly. Most contemporary scholars treat equity ownership in this way, provided the business itself passes the sector and financial screening tests.
Direct business ownership — as a founder, co-owner, or silent partner in a company that does not deal in riba — is universally agreed upon and requires no screening methodology at all.
Gold and silver are ribawi items in Islamic jurisprudence — commodities specifically named in the hadith as requiring hand-to-hand exchange to avoid riba al-fadl (excess) and riba al-nasi'ah (deferred exchange). Because of this, the conditions for permissible gold and silver investment are more strict than for equity:
Sprott Physical Gold Trust (PHYS) and Sprott Physical Silver Trust (PSLV) hold fully-allocated, independently-audited metal stored at the Royal Canadian Mint — your proportionate share corresponds to identified, unencumbered bars, with a right to redeem for physical delivery. These are structurally the strongest available products for halal precious-metal investing. MNT.TO (Royal Canadian Mint ETRs) is government-backed and widely used, but its prospectus states the gold is held on an unallocated basis — your unit represents an undivided interest in a pool, not a specific bar assigned to you. This is a stronger Sharia concern under AAOIFI Standard No. 57, which requires gold to be "fully allocated and under the buyer's control."
Conventional gold ETFs such as GLD also use unallocated custodial structures, and GLD additionally uses subcustodians with limited audit access. Scholars generally prefer products with fully allocated storage and a redemption right for precise precious-metals ownership. For equity ETFs (SPUS, HLAL, etc.) this concern is much weaker — the ribawi rules apply specifically to gold and silver as exchange commodities.
When you buy an ETF you own units of a fund, not the underlying shares directly. Most contemporary scholars — including the AAOIFI-aligned Shariah supervisory boards behind SPUS, HLAL, ISWD, and similar products — accept this as constructive ownership: as a unit-holder you are the beneficial owner of your proportionate share of the underlying assets, you receive your share of profits, and you bear losses. The fund structure is a convenience layer, not a prohibition.
The minority concern surfaces mainly for commodity ETFs. Because of the ribawi rules requiring immediate, specific possession of gold and silver, some scholars require direct ownership of the physical metal rather than ownership through a fund structure — even if the fund holds fully-allocated metal. For equity ETFs holding screened company shares, this concern is much weaker and not widely held.
Practically: for halal equity ETFs (SPUS, SPTE, SPRE, etc.) the scholarly consensus strongly supports fund-structure ownership. For gold and silver, prefer physically-allocated products with a redemption right over conventional pool-structure ETFs.
For halal precious-metal investing the key question is allocation structure. Fully allocated means your specific numbered bars are assigned only to you and cannot be lent, pledged, or commingled. A pool (unallocated) means you own an undivided interest — no identified bars. AAOIFI Standard No. 57 requires full allocation for permissible gold ownership.
Shariah ranking (strongest → weakest): (1) Questrade Trade Desk Segregated — you own specific numbered bars with realistic delivery at 1 oz minimum; (2) PHYS/PSLV — trust holds fully allocated gold but you own fund units not bars directly, and PHYS requires 400 oz (~$1.4M USD) minimum to redeem — theoretical for most investors; (3) MNT.TO / KILO.TO — pool structures, no specific bars; (4) Wealthsimple Gold / Quest Metals — pool, no halal certification. Cost note: Questrade Segregated costs ~1.50%/yr + $19.95/order. PHYS ≈ 0.39%/yr. For smaller amounts (<$10K), PHYS/PSLV are more practical despite the redemption caveat.
The Accounting and Auditing Organization for Islamic Financial Institutions (Bahrain) publishes the most widely used screening standards. The financial tests are:
| Ratio | Threshold | What it screens for |
|---|---|---|
| Total debt / total assets | < 33% | Limits reliance on interest-bearing debt |
| (Cash + interest-bearing receivables) / total assets | < 33% | Limits financial assets that generate riba |
| Haram revenue / total revenue | < 5% | Incidental non-compliant income is tolerated; substantial is not |
Most halal ETFs reference AAOIFI or something close to it. MSCI and FTSE Shariah indices use similar thresholds with minor differences.
An ETF provider takes a conventional index (say, the S&P 500), runs every holding through the screening criteria above, removes the ones that fail, and reweights what is left. A Shariah supervisory board — scholars with expertise in both Islamic law and finance — reviews and approves the methodology and audits the portfolio at least annually.
When a company's financials shift and it fails the ratios, it comes out at the next rebalance. The composition of screened ETFs changes over time as underlying companies' balance sheets change.
Every year, most halal ETFs publish a per-unit purification amount. This represents the fraction of dividends that came from incidental non-compliant activities by companies that otherwise passed screening. You donate that amount to charity.
The amounts are typically very small — a few cents per unit — but the practice matters. Your ETF provider's website will have the annual purification figure.
A Texas-based provider with ETFs on major US exchanges. The ones on this watchlist:
Shariah-screened US equities, around 60 holdings drawn from the S&P 500. Most big tech names make it through; most financials do not. Expense ratio ~0.49%.
Technology-focused. Heavier concentration in software and tech names relative to SPUS. Higher sector concentration means higher volatility.
Shariah-compliant real estate investment trusts. Only low-leverage REITs qualify — the debt screening removes most conventional REITs from consideration.
Sukuk ETF. Islamic bond equivalents — the fixed-income alternative for halal portfolios. Sukuk are structured as profit-sharing or asset-backed instruments rather than debt with interest.
SPUS and SPTE are the two that appear most often in this dashboard.
A robo-advisor built specifically for halal portfolios. They build diversified allocations using screened equities, sukuk, and gold. Regulated in the US, UK, and Malaysia.
If you would rather not pick individual ETFs, Wahed is the most straightforward managed option. More at wahedinvest.com.
Halal verdicts on this dashboard reflect the most recent AAOIFI-aligned screens at the time of writing. Ratios shift every quarter as companies file fresh balance sheets — a name that screens clean today can fail next quarter, and vice versa. Before acting on any individual ticker, run it through one of the services below for a current-as-of-today read.
The most polished retail screener — 30,000+ US and global tickers, modified AAOIFI methodology, compliance-change alerts, zakat calculator, and brokerage linking. Free tier covers basic checks; premium unlocks the detailed ratio breakdown.
Strict AAOIFI screening across 120,000+ equities and 9,000+ ETFs in 90+ markets — widest coverage if your ticker is outside the US. SEC-registered; offers self-directed trading and managed portfolios on top of the screener.
Uses Dow Jones Islamic Market (DJIM) methodology rather than AAOIFI — worth consulting as a second opinion when scholars disagree. 30,000+ stocks across 100+ markets and pre-built "Moons" portfolios.
Newer entrant focused on US equities (~10,000 tickers) with full AAOIFI ratio math shown explicitly — no black box. Free tier allows five screens a day; Pro at $9.99/mo lifts the cap and adds an AI scholar Q&A.
UK-leaning education hub with screening articles, an investment-comparison engine, and reviews of halal products (mortgages, pensions, crypto). Strongest if you want context and reasoning, not just a verdict.
The screening engine that powers FTSE's IdealRatings Islamic indices and many institutional Shariah funds. 40,000+ equities and 3,000+ sukuk covered. Not built for retail, but knowing it exists explains where most fund providers' data comes from.
Wikipedia summary of the DJIM two-level screen (sector then financial ratios). The full S&P Dow Jones methodology PDF is published openly on spglobal.com — search "S&P Shariah Indices methodology" for the current version.
LSEG's official methodology PDF for the FTSE Shariah index family. FTSE applies stricter zero-tolerance haram-revenue rules than DJIM in some categories — useful to compare against AAOIFI when verdicts disagree.
The source standards body in Bahrain. Standard No. 21 (Financial Papers) is the ratio reference cited by most screeners on this list. Announcements are free; the full electronic standards library requires a paid login.
Direct source for the SPUS / SPTE / SPRE / SPSK / SPWO prospectus PDFs and the annual purification calculator. Go here when you want to see the methodology the fund's Shariah board actually signed off on, not a third-party summary.
Disclosure: these are pointers, not endorsements. I have no affiliation, referral relationship, or financial interest with any of the services above. Use them as inputs to your own research and, when in doubt on a specific holding, consult a qualified scholar.
Views are not uniform on every question. The live debates:
Apple and Microsoft hold enormous cash reserves. Under strict readings of the AAOIFI cash ratio test, they would fail. Most mainstream Shariah indices apply the test at the consolidated balance sheet level and treat operating cash (needed to run the business) differently from financial assets. Most scholars accept SPUS including these names; a minority disagrees.
Halal equity ETFs pay dividends as a share of company profits (musharaka-type). That is fine. ETFs that pay a "fixed" yield more like interest — especially some sukuk funds — are more debated among scholars.
Not halal. The structure involves interest and speculation beyond what any mainstream scholar defends.
Not covered here and generally not recommended for halal investors. The gharar issue is real and broadly agreed upon.
As of May 28, 2026 — content reconciled with primary sources. Scholarly positions on this question continue to evolve.
Cryptocurrency is the single most-debated topic in contemporary Islamic finance. Apple stock is clearly equity in a real business; a sukuk is clearly a defined cash flow. BTC and ETH sit in a category that did not exist when the classical jurists wrote down the foundational rules, so scholars reading the same primary sources arrive at different conclusions depending on which analogy they weigh more heavily.
This is a fair summary of both positions, not a fatwa. If you are putting meaningful capital into either asset, talk to a scholar you personally trust.
Scholars in this camp: Mufti Muhammad Abu-Bakar (Blossom Finance, 2018); Mufti Faraz Adam (Amanah Advisors) — who holds crypto-assets can qualify as māl when they have lawful utility, but cautions that Bitcoin "is not ideal as a long-term investment" until a regulated and transparent framework matures; the Sharia Review Bureau in Bahrain (specific-project approvals); and Malaysia's Securities Commission Shariah Advisory Council, which in July 2020 became the first national regulator to classify cryptocurrencies as property (māl) and a commodity ('urūdh), declaring at least four major coins (incl. BTC, ETH) Shariah-compliant for trading on registered exchanges.
The user-facing question is rarely "is owning Bitcoin halal" — it's "can I actively buy and sell it?" Three high-profile US-based scholars have answered that yes, with specific guardrails. Their conditions matter more than the headline verdict.
Common thread across all three: spot only, no leverage. Bradford and Qadhi both frame this as the same constraint that governs forex spot trading — currency-for-currency exchange with immediate possession (qabd) is permissible; forwards, futures, perpetuals, and margin are not.
Among contemporary Islamic-finance scholars with specialised academic training, the weightiest single voice against crypto is Mufti Muhammad Taqi Usmani — President of the Shariah Board of AAOIFI (the standards body for global Islamic banks). His position:
Why this matters: AAOIFI standards drive Islamic banking globally. If you bank with an Islamic finance institution, your bank's internal Sharia board very likely defers to Usmani on this question. Holding crypto in a self-custody wallet is one thing; holding crypto through an Islamic financial product is currently not realistic.
Important nuance — AAOIFI itself has NOT issued a definitive crypto fatwa. AAOIFI's published standards emphasise principle-level compliance (no riba, no gharar, no maysir) and let individual products be evaluated case-by-case. Mufti Taqi Usmani's view is highly influential because he chairs the Shariah Board, but it is his scholarly opinion — not an AAOIFI standard. So "AAOIFI says Bitcoin is haram" is a common shorthand that's not literally true.
Two structural shifts changed the practical question for retail Muslim investors:
The net effect: if you want regulated, audited, custody-clean BTC exposure, the spot ETF route is a more Shariah-defensible structure than a Coinbase account — even though scholars who consider BTC itself impermissible would still reject both. For scholars in the permissible camp, the ETF structure removes several of the secondary objections (anonymity, custody risk) without resolving the foundational ones (sovereign backing, gharar).
Institutional voices in this camp: Egypt's Dar al-Iftāʾ under Sheikh Shawki Allam (December 2017 fatwa declaring Bitcoin haram, citing gharar, illicit use, and the state-prerogative argument; issued after consultation with economic experts); Turkey's Diyanet (November 2017 ruling that buying or selling cryptocurrency "is not compatible with religion at this time" because of speculation, illegal-activity exposure, and absence of state oversight); and many traditional Hanafi-fiqh authorities. Indonesia's national fatwa council (MUI) issued a more restrictive ruling than is often summarised: in November 2021 they declared cryptocurrency haram as currency, and only valid as a commodity if it meets the technical requirements of sil'ah with clear underlying value and benefit — a narrow exception that excludes most retail crypto holding.
Ethereum's September 2022 transition from Proof-of-Work to Proof-of-Stake added a layer that BTC does not have. Holding ETH without staking is treated by most scholars the same as holding BTC. Staking ETH is where the distinct debate lies:
If you want the cautious path: hold ETH without staking. If you want to stake, prefer self-validation or a provider whose Sharia advisory has issued a specific opinion; avoid centralised "earn" products with fixed quoted yields.
Across the disagreement on plain holding, there is broad consensus on what is more clearly impermissible:
BTC and ETH are on this dashboard as watchlist tickers because they are tracked daily and have well-defined buy zones and stops. Their inclusion is not an endorsement of permissibility — it is a recognition that many readers of this site already hold them, and clear trading levels are more useful than silence.
The Halal ETFs in the watchlist are ones reviewed and considered compliant under mainstream AAOIFI-aligned screening. They are here because they are actually investable — listed on major exchanges, reasonable liquidity, transparent methodology. This is not a fatwa. If you have doubt about any specific holding, consult a scholar you trust.