Best Halal Retirement Funds in the US 2026: Shariah 401(k)/IRA Holdings Ranked

Short answer: the wrapper is fine, the funds are the question

The most common halal-retirement mistake is asking whether a Roth IRA or a 401(k) is permissible. It is — every time. A Roth IRA, Traditional IRA, 401(k), and HSA are tax wrappers, not investments. They are containers. What determines whether your retirement plan is halal is what sits inside the container.

And here is where most Muslim savers get quietly tripped up: the default investment in nearly every employer 401(k) is a target-date fund, and target-date funds hold a large slug of conventional bonds and interest-bearing instruments. The default option is almost never compliant. So the real task is not picking an account — it is replacing the default holdings with Shariah-screened funds.

For 2026, the single strongest core holding is SPUS (SP Funds S&P 500 Sharia Industry Exclusions ETF): a 0.45% expense ratio, roughly $2.07B in assets, and the broadest compliant analogue to a standard S&P 500 index fund. Pair it with SPSK for the fixed-income sleeve, and you have a two-fund halal retirement portfolio that costs less than many actively managed conventional funds.

The ranking criteria (and why)

A retirement holding is a 20-to-40-year decision, so it has to be judged on the things that compound over decades, not on a one-year return chart. We rank on three named criteria:

• Expense ratio. Fees are the one variable you control and the one that compounds against you with certainty. A 0.45% fund versus a 1.01% fund is a half-point drag every year for life.
• Screening rigor. Which standard does the fund apply, and how strictly? AAOIFI Standard 21 (30/30/5) is the strictest of the mainstream screens; S&P/Dow Jones and MSCI/FTSE use a slightly looser 33% threshold. A fund built on a stricter screen needs less purification.
• Assets under management (AUM). Scale matters for liquidity, tight bid-ask spreads, and fund survivability. A $2B fund is not getting shuttered; a thinly traded $30M fund might, and a closure forces a taxable event you did not choose.

How the AAOIFI screen actually works

Before the ranking, the screen itself — because it is why VOO and VTI cannot sit in a halal account. Under AAOIFI Shari’ah Standard 21, a company passes a two-stage test:

Stage 1 — business activity. A company fails if more than 5% of revenue comes from prohibited activities: conventional (interest-based) finance and insurance, alcohol, tobacco and cannabis, gambling, pork, adult entertainment, weapons and defense, or conventional music and media.

Stage 2 — financial ratios. Even a clean-business company fails if its balance sheet is too leveraged with interest:

A standard S&P 500 index fund holds JPMorgan, Bank of America, Berkshire Hathaway, and a wall of insurers — conventional finance is one of the largest sectors in the index. That alone breaches the Stage 1 activity screen, before you even get to the debt ratios. SPUS and HLAL run this screen and exclude the failures. That is the entire difference.

The 2026 halal retirement-fund ranking

Here is the core compliant US universe, ranked by the three criteria above. Expense ratios and assets are issuer-verified (re-confirmed 2026-06-23 against the SP Funds, Wahed, and Saturna fund pages).

#1: SPUS — the default core holding

SPUS earns the top slot on all three criteria at once. It is the cheapest broad-market halal US equity fund at 0.45%, the largest at roughly $2.07B in net assets (issuer figure, 04/01/2026, NAV $48.60), and it applies the AAOIFI/S&P screen to an S&P 500 base — so it is the closest thing to a drop-in replacement for the VOO or 401(k) default index fund a typical saver would otherwise hold.

Because it excludes conventional finance, SPUS skews heavily toward technology and healthcare. Its top holdings as of mid-2026 are NVIDIA, Apple, Microsoft, Alphabet, Broadcom, Micron, Tesla, AMD, Eli Lilly, and Exxon Mobil — no banks, no insurers. That concentration is the trade-off (more on that below), but for a multi-decade equity sleeve it is the position I would build around.

One quote-source note worth knowing: Yahoo Finance has been stale-quoting SPUS at roughly $2.7B and an NAV near $57.46. Use the issuer page, not the aggregator — the live SP Funds figure is ~$2.07B and $48.60.

#2: HLAL — the equally-valid alternative

HLAL (Wahed FTSE USA Shariah ETF) tracks FTSE Shariah USA, screened by Yasaar Ltd. It holds 211 names with a top-10 weight around 54.3% (Apple 13.5%, Microsoft 9.1%, Alphabet 6.3% as of early June 2026), runs 0.50%, and holds roughly $900M. It is a perfectly good core holding. SPUS edges it only on fee (0.45% vs 0.50%) and scale (~$2.07B vs ~$900M) — differences that matter at the margin over decades but would not be wrong either way. If your platform offers HLAL but not SPUS, hold HLAL without a second thought.

#3: SPSK — what replaces your bonds

This is the holding most Muslim savers miss entirely. A conventional retirement glide path shifts from stocks into bonds as you age — but bonds, Treasuries, CDs, and money-market funds are all interest (riba) and not permissible. The halal replacement is sukuk: asset-backed certificates that pay returns from real assets and lease income rather than from lending money at interest.

SPSK (SP Funds Dow Jones Global Sukuk ETF) is the US-listed vehicle for this, at a 0.50% expense ratio with a 30-day SEC yield of 4.41% (03/31/2026). As you move toward retirement and want to de-risk, SPSK — not a bond fund — is the sleeve you grow.

#4 and #5: the Amana funds — active, and you pay for it

AMAGX (Amana Growth) and AMANX (Amana Income) from Saturna Capital are the longest-running US Islamic funds, in operation since 1986. AMAGX posted strong long-run numbers — 17.56% annualized over 10 years and 13.92% over 5 years (to 05/29/2026). But it costs 0.86%, and AMANX costs 1.01% — roughly double SPUS. That fee gap is the whole story for a retirement holding.

The fee math most people miss over a retirement horizon

A half-point fee difference sounds trivial. Over a retirement timeline it is not. Hold the difference between SPUS at 0.45% and AMANX at 1.01% — a 0.56-point gap — on a balance that grows over 30 years, and the cheaper fund quietly keeps tens of thousands of dollars that would otherwise leak out to expenses, regardless of which manager picks better stocks in any given year.

That is not an argument that active management never wins; AMAGX’s 10-year record is real. It is an argument that for the core of a multi-decade halal retirement account, the certainty of a low fee beats the hope of active outperformance. Use Amana as a satellite if you want active exposure — not as the foundation.

There is also a quiet cost the screen itself creates: purification. Even a compliant fund earns a small slice of incidental interest income (from cash holdings), and that share of profit must be donated to charity — it is not tax-deductible. SP Funds publishes a quarterly purification calculator for SPUS and SPSK; Wahed publishes quarterly HLAL purification reports. Build the habit of checking it once a year.

What most people miss: the 401(k) menu trap

Here is where the real-world friction lives. Most employer 401(k) plans offer a fixed menu of 15-to-25 funds, and the odds that any of them is Shariah-compliant are low. The default target-date fund is out (bonds). The bond funds are out (interest). The S&P 500 index fund is out (conventional finance). You can be left staring at a menu where nothing qualifies.

Three moves, in order:

1. Check for a self-directed brokerage window. Many large plans (especially those at Fidelity, Schwab, and Vanguard recordkeepers) offer a brokerage window — Fidelity calls it BrokerageLink, Schwab calls it a Self-Directed Brokerage Account. Inside that window you can usually buy SPUS or HLAL directly. This is the cleanest fix because it keeps the full 401(k) contribution limit ($24,500 employee deferral for 2026, plus catch-up) and the employer match.
2. Capture the match, then leave. If there is no brokerage window and no compliant fund, contribute only up to the employer match (it is free money, and many scholars treat capturing it as acceptable). Then stop contributing to the 401(k) beyond the match.
3. Route the rest to a halal IRA. Open a Roth or Traditional IRA at any mainstream brokerage — the broker is just a custodian, and that is permissible — and hold SPUS, HLAL, and SPSK there with full control. The 2026 IRA limit is $7,500 ($8,500 with the age-50 catch-up).

The mainstream brokerage point is worth repeating because it confuses people: Fidelity, Schwab, and Vanguard are permissible custodians. Compliance depends on what you hold, not on whose platform holds it. You do not need a specialty Islamic brokerage to build a halal retirement account — though a platform like Wahed Invest (account minimum $100, IRA support) can be a turnkey option if you would rather not assemble it yourself.

A two-fund halal retirement portfolio

You do not need a complicated stack. A defensible, fully-compliant retirement portfolio is two funds, with the mix shifting as you age:

• Growth phase (20+ years out): heavy SPUS for the equity engine, a small SPSK sleeve. The concentration in tech and healthcare is your main risk — size the position knowing it is not as diversified as a conventional total-market fund.
• Approaching retirement (within ~10 years): grow the SPSK sukuk allocation to dampen volatility, the same de-risking a conventional saver does with bonds — just done the halal way.
• Want active exposure: carve out a satellite slice for AMAGX, accepting the higher fee in exchange for active management. Keep it a satellite, not the core.

The decision lever

Stop evaluating the account and start evaluating the holdings. The Roth IRA, the 401(k), the HSA — all permissible, all just containers. Your one move is to override the default target-date fund and bond options and hold the screened funds instead: SPUS as the core, SPSK as the bond replacement, HLAL if your platform offers it over SPUS, and Amana only if you want to pay for active management. Do that inside whichever wrapper gives you the best tax treatment, and your retirement plan is halal by construction.

This applies the AAOIFI Shari’ah Standard 21 screen to publicly available holdings data as of June 2026. Screening is a methodology, not a religious ruling — fund holdings change quarterly, scholars differ on gray areas, and this is not a fatwa. Verify the current screen via Musaffa or Zoya and consult a qualified scholar for your situation.