ETFs
Best halal ETFs for 2026: HLAL vs SPUS vs UMMA compared
Halal ETFs are the simplest way for most Muslim investors to get diversified, Shariah-screened exposure to global equities — without buying and screening individual stocks yourself. As of 2026 the lineup has matured: a handful of US-listed funds now dominate, each with a distinct flavour of screening methodology, expense ratio and sector tilt. This guide compares the five that matter and explains how to choose.
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Short answer
For US large-cap exposure, SPUS (0.45% expense ratio, AAOIFI-screened, S&P 500 universe) is the most widely held halal ETF in 2026, with HLAL (Wahed's fund, 0.50%) a close second. UMMA covers international developed markets, ISWD gives global all-cap exposure, and SPSK delivers sukuk for the fixed-income sleeve. Most halal portfolios in 2026 combine SPUS or HLAL with UMMA and SPSK.
What makes an ETF halal
A halal ETF is a fund whose holdings are screened against Shariah criteria — typically the AAOIFI or S&P Shariah methodology. The screen rules out companies whose primary business is impermissible (alcohol, conventional banking, gambling, adult entertainment, pork, weapons) and applies financial-ratio filters to exclude companies that carry too much interest-bearing debt or earn too much from incidental interest income.
The ETF wrapper itself is permissible — you are buying a proportional share of a basket of permissible stocks, not a derivative or a debt instrument. Dividends from any small residual non-compliant income are purified by the fund manager or disclosed so investors can purify themselves.
SPUS — SP Funds S&P 500 Sharia Industry Exclusions ETF
SPUS tracks the S&P 500 Shariah Industry Exclusions Index — essentially the S&P 500 with non-compliant sectors and over-leveraged companies stripped out. The result is a roughly 200-stock portfolio heavily concentrated in US technology, healthcare and consumer cyclicals.
It is the largest US-listed halal ETF by assets in 2026 and the cheapest of the equity options at a 0.45% expense ratio. Because the underlying universe is the S&P 500, sector concentration in tech is significant — that is the trade-off for using a Shariah filter on a large-cap US benchmark.
- Universe: S&P 500 (US large-cap)
- Screening: S&P Shariah Industry Exclusions methodology
- Expense ratio: 0.45%
- Tilt: heavy tech and healthcare; no financials
- Best for: the core US equity sleeve of a halal portfolio
HLAL — Wahed FTSE USA Shariah ETF
HLAL is Wahed's flagship US equity ETF, tracking the FTSE USA Shariah Index. The screening methodology is FTSE/Yasaar rather than S&P, which produces a slightly different but largely overlapping holding list compared with SPUS.
Expense ratio is 0.50% — five basis points more than SPUS. Performance over the last three years has tracked SPUS closely; the meaningful differences are the underlying index provider and the fact that Wahed publishes its purification ratios annually, which some investors prefer for transparency.
- Universe: FTSE USA (broader than S&P 500, includes mid-caps)
- Screening: FTSE/Yasaar Shariah methodology
- Expense ratio: 0.50%
- Purification: published annually by Wahed
- Best for: investors who want broader-than-S&P-500 US exposure or trust the Wahed brand
UMMA — Wahed Dow Jones Islamic World ex-US ETF
UMMA fills the international-equity gap. It tracks the Dow Jones Islamic Market International Titans 100 — large-cap developed-market companies outside the US, screened to DJIM Shariah standards.
Expense ratio is 0.65%, which is on the higher side, but there is no real competitor for global ex-US Shariah exposure at the ETF level. Pairing UMMA with SPUS or HLAL is the standard way to get developed-market diversification without buying individual international tickers.
- Universe: developed markets ex-US, large-cap
- Screening: Dow Jones Islamic Market methodology
- Expense ratio: 0.65%
- Best for: the international-equity sleeve of a halal portfolio
ISWD and SPSK — global all-cap and sukuk
ISWD (iShares MSCI World Islamic) gives you global all-cap developed-market exposure in a single ticker if you would rather not split US and ex-US sleeves yourself. It is listed in London (UCITS), which makes it more accessible to UK and EU investors than the US-listed funds.
SPSK (SP Funds Dow Jones Global Sukuk ETF) is the only US-listed sukuk ETF and it sits in the fixed-income sleeve as the halal substitute for bonds. Yield in 2026 is comparable to short-duration US Treasuries; the duration profile is short, which limits interest-rate risk.
- ISWD: global developed markets, ~0.30% expense ratio, UCITS-domiciled
- SPSK: global sukuk (halal fixed income), ~0.55% expense ratio
- Together they round out a complete halal portfolio: equity + fixed income, US + international
How to pick: the 2026 default portfolio
For most retail Muslim investors in 2026, a sensible long-term allocation looks like this: a core US-equity ETF (SPUS or HLAL), an international-equity ETF (UMMA), and a sukuk ETF (SPSK) for the fixed-income sleeve. Weight the three based on your risk tolerance and time horizon.
Buy them inside a swap-free brokerage account so dividends are not reinvested via interest-bearing cash sweep. Reinvest dividends manually or use the broker's halal-compatible DRIP if one is offered. Purify any residual non-compliant income annually using the ratios the fund publishes.
- Aggressive (long horizon): 60% SPUS, 30% UMMA, 10% SPSK
- Balanced: 45% SPUS, 25% UMMA, 30% SPSK
- Conservative: 30% SPUS, 15% UMMA, 55% SPSK
- Hold through a swap-free / Islamic brokerage account
The practical next step
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Frequently asked questions
Are halal ETFs actually halal?
Yes — a properly Shariah-screened ETF holds only permissible companies and is structured as ownership of those underlying shares, not as a derivative or debt instrument. AAOIFI, S&P Shariah and FTSE/Yasaar are the screening methodologies most commonly used.
What is the difference between HLAL and SPUS?
Both are US-equity halal ETFs. SPUS tracks the S&P 500 Shariah index at a 0.45% expense ratio; HLAL tracks the FTSE USA Shariah index at 0.50%. Holdings overlap significantly; HLAL includes some mid-caps. Performance has historically tracked very closely.
Is UMMA worth the 0.65% expense ratio?
If you want international developed-market exposure in a single Shariah-screened ticker, UMMA is currently the only viable US-listed option. The expense ratio is high relative to conventional international ETFs, but there is no direct halal competitor at this scale.
Can I just buy a conventional ETF and donate the haram percentage?
Most scholars say no — the issue is ownership, not just income. A conventional broad-market ETF holds shares of impermissible companies (conventional banks, alcohol, gambling), and owning those shares is itself the problem. A screened ETF avoids this at the holdings level.
Do halal ETFs underperform conventional ones?
Over rolling 5-year periods SPUS and HLAL have tracked the S&P 500 closely, sometimes outperforming due to the absence of financials during banking-sector drawdowns and the tech tilt during growth-driven markets. Outcomes vary by cycle.
What is the best halal ETF for beginners in 2026?
For US-based investors starting with a single ticker, SPUS is the most common entry point — lowest expense ratio among halal equity ETFs and tracks a familiar large-cap US benchmark. Add UMMA and SPSK as the portfolio grows.