Shariah-Compliant ETFs in the USA
Here are some of the most trusted and time-tested Shariah-compliant ETFs in the U.S.:
1. SP Funds S&P 500 Shariah Industry Exclusions ETF (SPUS)
- Overview: This ETF tracks the S&P 500 Shariah Industry Exclusions Index, investing in large U.S. companies that align with Islamic principles. It excludes industries like alcohol, gambling, and traditional financial services.
- Annual Growth: Historically, the S&P 500 averages a 7–10% annual return over the long term.
- Dividend Yield: Around 1.5% annually.
2. Wahed FTSE USA Shariah ETF (HLAL)
- Overview: HLAL follows the FTSE USA Shariah Index, giving exposure to U.S. companies that meet strict ethical guidelines.
- Annual Growth: Expected returns align with the broader market, averaging 7–10% annually.
- Dividend Yield: Around 1.3% annually.
3. Amana Growth Fund (AMAGX)
- Overview: This mutual fund targets growth-oriented, Shariah-compliant companies. It’s managed by Saturna Capital, a pioneer in Islamic investing in the U.S.
- Annual Growth: Around 7–9% historically, with a focus on long-term appreciation.
Potential Scenario: Investing $300 Monthly in U.S. ETFs
Let’s assume an 8% annual return for simplicity.
| Year | Total Contributions | Portfolio Value |
|---|
| 10 Years | $36,000 | ~$54,522 |
| 20 Years | $72,000 | ~$178,489 |
| 30 Years | $108,000 | ~$444,159 |
Note: These figures include both capital appreciation and dividend reinvestments.
Shariah-Compliant ETFs in Europe
Europe also offers robust Shariah-compliant investment options. Here are the top picks:
1. VanEck Global Real Estate UCITS ETF (REIT)
- Overview: This ETF focuses on real estate companies globally, excluding unethical industries. It’s ideal for investors seeking steady income through dividends.
- Annual Growth: Around 6–8%.
- Dividend Yield: Approximately 3.5–4% annually.
2. SP Funds S&P 500 Shariah Industry Exclusions UCITS ETF
- Overview: A Europe-based version of SPUS, this ETF provides exposure to the S&P 500 index while adhering to Shariah principles.
- Annual Growth: Around 7–10%.
- Dividend Yield: ~1.5% annually.
3. iShares MSCI World Islamic UCITS ETF
- Overview: This ETF invests in developed markets globally, providing diversified exposure to Shariah-compliant companies across multiple sectors.
- Annual Growth: Around 6–8%.
Potential Scenario: Investing €300 Monthly in EU ETFs
Assuming an 8% annual return, here’s what €300 monthly could grow into:
| Year | Total Contributions | Portfolio Value |
|---|
| 10 Years | €36,000 | ~€54,522 |
| 20 Years | €72,000 | ~€178,489 |
| 30 Years | €108,000 | ~€444,159 |
Note: Dividend reinvestments and compounding play a significant role in these outcomes.
Where to Invest?
For U.S. Investors
- Platforms: Vanguard, Charles Schwab, Fidelity, and other reputable companies.
- Direct Investment: Work directly with fund providers like SP Funds or Saturna Capital.
For European Investors
- Platforms: Bolero, Degiro, Curvo, and Saxo Bank.
- Private Banks: Bank Delen and others offer bespoke Shariah-compliant portfolios.
Summary
Investing in Shariah-compliant ETFs provides an ethical way to grow wealth while adhering to Islamic principles. With consistent contributions and a long-term vision, these investments can generate passive income and even generational wealth.
- In the U.S., funds like SPUS and HLAL offer exposure to top-performing companies with potential returns of 7–10% annually.
- In Europe, ETFs like VanEck REIT and SP Funds UCITS ETF provide diversified and Shariah-compliant options.
By investing $300 or €300 monthly, you could grow your portfolio to $444,000 or €444,000 in 30 years.
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