Halal ETF
An exchange-traded fund that only holds companies passing Shariah screening criteria.
A halal ETF tracks an Islamic index (such as the MSCI World Islamic Index), which excludes companies involved in prohibited industries and those with too much interest-based income or debt. By buying one ETF, you instantly own a tiny slice of hundreds of screened companies.
Islamic perspective
Halal ETFs are considered permissible by most contemporary scholars, provided the underlying index uses rigorous screening and the fund performs regular purification distributions.
Example
Mariam buys one unit of the iShares MSCI World Islamic ETF (ISWD) for around £25. She instantly owns a fraction of over 350 companies across 23 countries, all of which have passed Shariah screening.
Related terms
Learn more in