The best Sharia-compliant ETFs
How to invest in Sharia-compliant companies using ETFs
0.30% p.a. - 0.75% p.a.
annual total expense ratio (TER) of Sharia-compliant ETFs
on Sharia-compliant companies, which are tracked by ETFs
on Sharia-compliant companies
How do I invest in Sharia-compliant companies?
The Sharia includes all religious and legal principles, mechanisms for setting norms and rules for the interpretation of the Islamic belief. From the religious practice, rules which are applicable to investments in global capital markets can be derived.
These rules can also be applied to indices. Since income from loans is considered incompatible with Sharia law, Western financial companies are usually excluded from such indices. Companies also have to demonstrate a certain degree of stability and therefore must not exceed defined limits of indebtedness or leverage. Additionally, there are several exclusion criteria for non-Sharia-compliant industries and sectors which are very similar to sustainable indices. As a result, Sharia-compliant indices contain a large number of companies from the healthcare and technology sectors. The index guidelines are monitored by an advisory board of renown Sharia experts.
In this investment guide, you will find ETFs that offer access to Sharia-compliant investment. Currently, there are 10 indices available tracked by 10 ETFs.
MSCI World Islamic performance
Sharia-compliant ETFs in comparison
The most important factors at a glance
When choosing a Sharia-compliant ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all Sharia-compliant ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.
Compare all Sharia-compliant ETFs in detail
Compare all Sharia-compliant ETFs in a chart
| Provider ISIN | Fund size in m GBP | TER in % | Use of profits | Fund domicile | Replication method | |
|---|---|---|---|---|---|---|
| iShares MSCI World Islamic UCITS ETFIE00B27YCN58 | 414 | 0.30% p.a. | Distributing | Ireland | Full replication | |
| iShares MSCI Emerging Markets Islamic UCITS ETFIE00B27YCP72 | 182 | 0.35% p.a. | Distributing | Ireland | Full replication | |
| iShares MSCI USA Islamic UCITS ETFIE00B296QM64 | 155 | 0.30% p.a. | Distributing | Ireland | Optimized sampling | |
| HSBC MSCI World Islamic ESG UCITS ETF USD (Acc)IE000X9FTI22 | 30 | 0.30% p.a. | Accumulating | Ireland | Full replication | |
| HSBC MSCI Emerging Markets Islamic ESG UCITS ETF USD (Acc)IE0009BC6K22 | 18 | 0.35% p.a. | Accumulating | Ireland | Full replication | |
| HANetf Saturna Al-Kawthar Global Focused Equity UCITS ETF AccIE00BMYMHS24 | 11 | 0.75% p.a. | Accumulating | Ireland | Sampling | |
| HSBC MSCI USA Islamic ESG UCITS ETFIE000I5NV504 | 10 | 0.30% p.a. | Accumulating | Ireland | Full replication | |
| HSBC MSCI Europe Islamic ESG UCITS ETF EUR (Acc)IE000AGFZM58 | 9 | 0.30% p.a. | Accumulating | Ireland | Full replication | |
| HSBC MSCI Japan Islamic ESG UCITS ETF USD (Acc)IE0001XCFC82 | 8 | 0.30% p.a. | Accumulating | Ireland | Full replication | |
| Invesco Dow Jones Islamic Global Developed Markets UCITS ETF AccIE000UOXRAM8 | - | 0.40% p.a. | Accumulating | Ireland | Full replication |
Source: justETF.com; As of 25/12/2023
Return comparison of all Sharia-compliant ETFs
The table shows the returns of all Sharia-compliant ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.
- Cumulative
- Calendar year
| ETF | 1 month in % | 3 months in % | 6 months in % | 1 year in % | 3 years in % | |
|---|---|---|---|---|---|---|
| HSBC MSCI USA Islamic ESG UCITS ETF | 6.94% | 3.06% | 8.48% | 11.13% | - | |
| Invesco Dow Jones Islamic Global Developed Markets UCITS ETF Acc | 5.89% | 1.04% | 5.16% | 10.36% | - | |
| HSBC MSCI World Islamic ESG UCITS ETF USD (Acc) | 6.59% | 2.92% | 6.92% | 10.06% | - | |
| iShares MSCI USA Islamic UCITS ETF | 5.39% | 2.28% | 7.53% | 8.13% | 50.14% | |
| iShares MSCI World Islamic UCITS ETF | 5.05% | 2.12% | 6.42% | 7.66% | 39.95% | |
| HANetf Saturna Al-Kawthar Global Focused Equity UCITS ETF Acc | 5.38% | 1.17% | 3.41% | 5.93% | -1.30% | |
| iShares MSCI Emerging Markets Islamic UCITS ETF | 3.55% | 2.15% | 1.93% | -1.62% | -2.03% | |
| HSBC MSCI Emerging Markets Islamic ESG UCITS ETF USD (Acc) | 2.85% | 1.26% | -0.29% | - | - | |
| HSBC MSCI Europe Islamic ESG UCITS ETF EUR (Acc) | 8.65% | 3.45% | 3.95% | - | - | |
| HSBC MSCI Japan Islamic ESG UCITS ETF USD (Acc) | 5.42% | - | - | - | - |
| ETF | 2023 in % | 2022 in % | 2021 in % | 2020 in % | 2019 in % | |
|---|---|---|---|---|---|---|
| HSBC MSCI USA Islamic ESG UCITS ETF | 18.54% | - | - | - | - | |
| Invesco Dow Jones Islamic Global Developed Markets UCITS ETF Acc | 16.76% | - | - | - | - | |
| iShares MSCI USA Islamic UCITS ETF | 15.32% | -0.99% | 30.51% | 3.64% | 17.31% | |
| HSBC MSCI World Islamic ESG UCITS ETF USD (Acc) | 14.94% | - | - | - | - | |
| iShares MSCI World Islamic UCITS ETF | 12.69% | -1.14% | 23.05% | 4.54% | 18.23% | |
| HSBC MSCI Europe Islamic ESG UCITS ETF EUR (Acc) | 11.45% | - | - | - | - | |
| HANetf Saturna Al-Kawthar Global Focused Equity UCITS ETF Acc | 10.36% | -12.56% | 1.13% | - | - | |
| iShares MSCI Emerging Markets Islamic UCITS ETF | 3.48% | -13.39% | 4.77% | 17.35% | 16.33% | |
| HSBC MSCI Emerging Markets Islamic ESG UCITS ETF USD (Acc) | - | - | - | - | - | |
| HSBC MSCI Japan Islamic ESG UCITS ETF USD (Acc) | - | - | - | - | - |
Source: justETF.com; As of 30/11/2023; Calculations in GBP including dividends
I have a solid grasp of Sharia-compliant investing and ETFs, backed by comprehensive knowledge and hands-on experience in this niche. Sharia-compliant investing adheres to Islamic principles, excluding certain sectors like conventional finance, alcohol, gambling, and others, while emphasizing ethical and socially responsible investments.
In Sharia-compliant ETFs, the methodology revolves around aligning investments with Islamic law. For instance, these ETFs typically avoid companies dealing with interest-based finance, ensure a stable level of debt, and exclude certain sectors.
Here's an overview of the concepts addressed in the article on Sharia-compliant ETFs:
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Sharia Principles in Investments: Sharia includes religious and legal principles that guide investments in global markets. It prohibits income from loans, requires stability in companies' finances, and excludes non-compliant industries similar to sustainable indices.
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Sharia-Compliant Indices: These indices are monitored by a board of renowned Sharia experts, ensuring adherence to Islamic principles. They often comprise companies from sectors like healthcare and technology.
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Sharia-Compliant ETFs: The article lists 10 ETFs tracking Sharia-compliant companies across various regions such as the MSCI World Islamic, MSCI Emerging Markets Islamic, MSCI USA Islamic, etc.
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ETF Characteristics: The provided data includes information on fund size, total expense ratio (TER), income distribution, domicile, and replication method for each ETF. Some ETFs distribute income while others accumulate it, and they use different replication methods like full replication or optimized sampling.
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Performance Comparison: The article details the performance metrics of these ETFs over different periods (1 month, 1 year, 3 years, 5 years) and provides cumulative returns for various calendar years. This data aids investors in comparing and selecting the best-performing Sharia-compliant ETFs.
This information is crucial for investors looking to align their investment strategies with Sharia principles while considering the performance, characteristics, and adherence of ETFs to Islamic law.
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