You do not need to screen stocks yourself. Shariah supervisory boards — panels of qualified Islamic scholars — do it for you when you invest through a halal ETF.
The MSCI World Islamic Index, which underpins the ISWD ETF, is screened by MSCI using standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Dow Jones Islamic Market standards. The index is reviewed quarterly.
- ISWD (iShares MSCI World Islamic): reviewed quarterly by MSCI with scholar oversight
- HIWO (HSBC Islamic Global Equity): independently certified halal
- HIUS (HSBC Islamic US Equity): certified halal
- Wahed Invest portfolios: reviewed by an internal Shariah board
In 2021, a major technology company exceeded the 5% interest income threshold during a quarter when interest rates rose. It was removed from the MSCI Islamic Index at the next quarterly review. Investors in ISWD saw the company automatically removed and replaced. No action was needed from them.
Islamic scholars accept that no large public company is entirely free of impermissible activities. The screening thresholds (5%, 33%) reflect a scholarly consensus on what level of involvement is tolerable before the investment becomes problematic. This is ijtihad — scholarly reasoning applied to modern financial instruments.
If you invest in individual stocks rather than ETFs, you carry the responsibility of checking compliance yourself. Tools like Zoya Finance (zoya.finance) provide stock-by-stock Shariah ratings.