Halal S&P 500 Alternatives: SPUS vs. HLAL Compared on Holdings, Fees, and 3-Year Returns
You want broad US equity exposure without riba, alcohol, gambling, or weapons stocks. The S&P 500 index itself fails Shariah screening — roughly 20–25% of its constituents are non-compliant. Two ETFs exist specifically to solve this: SPUS and HLAL. Every “halal investing guide” mentions both, but almost none compare them head to head on the numbers that actually matter: what is in each fund, what each one costs, and how each has performed relative to the unscreened S&P 500. This article does that comparison with real holdings data, real expense ratios, and a worked $10,000 example.
Quick Answer
The two main halal alternatives to a conventional S&P 500 index fund are SPUS (SP Funds S&P 500 Sharia Industry Exclusions ETF, 0.45% expense ratio, ~220 holdings) and HLAL (Wahed FTSE USA Shariah ETF, 0.50% expense ratio, ~199 holdings). Both strip out conventional banks, alcohol, tobacco, gambling, and weapons stocks from a broad US large-cap universe, leaving portfolios heavily tilted toward technology (roughly 40-60% of each fund). SPUS tracks an S&P-branded Shariah index; HLAL tracks a FTSE-branded one. Over 5 years through mid-2026, SPUS has returned approximately 17% annualized versus HLAL at roughly 15.5% — both trailing the unscreened S&P 500 by 1–3 percentage points annually. On a $10,000 investment over 3 years, the tracking gap to the broad index costs roughly $500–$1,500 depending on the period. That is the measurable cost of Shariah screening, and knowing it lets you plan around it rather than guess.
Why the S&P 500 itself is not Shariah-compliant
The S&P 500 holds roughly 500 of the largest US-listed companies — including JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, Citigroup, American Express, and dozens of other conventional banks and insurance companies. These firms earn the majority of their revenue from interest-based lending, which is riba. They are automatically excluded by any Shariah screen.
Beyond financials, the S&P 500 includes alcohol producers (Constellation Brands, Brown-Forman), gambling operators (Las Vegas Sands, Wynn Resorts), weapons manufacturers (Lockheed Martin, Raytheon, Northrop Grumman), and tobacco companies (Philip Morris, Altria). All excluded.
After removing these sectors and applying financial-ratio screens (debt-to-market-cap, cash-to-market-cap, receivables-to-market-cap thresholds), roughly 200–230 of the original 500 constituents survive. That is what SPUS and HLAL hold — the compliant remainder of the broad index.
SPUS vs. HLAL: the fundamental difference
Both funds aim to give you “halal S&P 500-like exposure.” But they track different indexes maintained by different index providers with different Shariah advisory boards:
| Feature | SPUS | HLAL |
|---|---|---|
| Full name | SP Funds S&P 500 Sharia Industry Exclusions ETF | Wahed FTSE USA Shariah ETF |
| Underlying index | S&P 500 Shariah Industry Exclusions Index | FTSE USA Shariah Index |
| Index provider | S&P Dow Jones Indices | FTSE Russell |
| Shariah advisor | Ratings Intelligence (S&P methodology, AAOIFI-aligned) | Yasaar Ltd. (FTSE methodology) |
| Expense ratio | 0.45% | 0.50% |
| Number of holdings | ~220 | ~199 |
| AUM (mid-2026) | ~$2.4 billion | ~$722 million |
| Exchange | NYSE Arca | NASDAQ |
| Starting universe | S&P 500 only | FTSE USA Index (broader US large/mid-cap) |
The key structural difference: SPUS starts with the S&P 500 and removes non-compliant stocks. HLAL starts with the broader FTSE USA universe (which includes mid-caps not in the S&P 500) and applies FTSE’s own Shariah filter. This means the two funds do not hold identical stocks, even though both aim for “halal large-cap US equity.”
Holdings comparison: where the two funds diverge
Both funds are heavily concentrated in technology — that is the inevitable consequence of removing financials, which typically make up 12–15% of the S&P 500. When you pull out banks and insurers, technology’s share of the remaining portfolio expands from ~30% to roughly 40–60%.
Top 5 holdings (as of May 2026)
| Rank | SPUS | Weight | HLAL | Weight |
|---|---|---|---|---|
| 1 | NVIDIA (NVDA) | 14.74% | Apple (AAPL) | 13.22% |
| 2 | Apple (AAPL) | 12.07% | Microsoft (MSFT) | 9.51% |
| 3 | Microsoft (MSFT) | 8.52% | Alphabet (GOOGL) | 6.31% |
| 4 | Alphabet (GOOGL) | 6.20% | Broadcom (AVGO) | 5.83% |
| 5 | Broadcom (AVGO) | 5.36% | Alphabet (GOOG) | 5.09% |
The NVIDIA divergence is the headline. As of May 2026, SPUS holds NVIDIA as its largest position at nearly 15% of the fund. HLAL does not include NVIDIA in its top 10 holdings. This is a direct result of the different screening methodologies — the S&P Shariah index and the FTSE Shariah index apply different financial-ratio thresholds and sector classification rules. A stock that passes one screen can fail the other, or receive a materially different weighting.
This single difference explains a large portion of the return divergence between the two funds. In periods when NVIDIA surges (as it did through much of 2023–2025), SPUS benefits disproportionately. In a NVIDIA drawdown, SPUS would take a harder hit.
Sector concentration
| Sector | SPUS (approx.) | HLAL (approx.) | S&P 500 |
|---|---|---|---|
| Technology | ~59% | ~45% | ~32% |
| Healthcare | ~12% | ~15% | ~12% |
| Consumer | ~10% | ~12% | ~13% |
| Financials | 0% | 0% | ~13% |
| Industrials / Energy / Other | ~19% | ~28% | ~30% |
Both funds are tech bets disguised as broad-market funds. When you remove financials and redistribute the weights, technology dominates. SPUS is more concentrated in tech (~59%) than HLAL (~45%), partly because of the NVIDIA overweight. If you are concerned about tech concentration, HLAL gives you slightly more sector balance — but neither fund is diversified the way the full S&P 500 is.
Expense ratios: what the fee gap actually costs you
SPUS charges 0.45% per year. HLAL charges 0.50%. For context, VOO (Vanguard S&P 500 ETF) charges 0.03%.
On a $50,000 portfolio, the annual fee difference between SPUS and HLAL is $25 — trivial. The annual fee difference between either halal ETF and VOO is $210–$235. Over 20 years at 10% average returns, the cumulative fee drag of SPUS versus VOO on $50,000 is roughly $5,600. That is real money — but it is the cost of Shariah compliance in a packaged ETF product, and there is no way around it unless you direct-index.
20-year fee drag on a $50,000 investment (assuming 10% average annual return)
| Fund | Expense ratio | Ending balance | Lost to fees vs. VOO |
|---|---|---|---|
| VOO (S&P 500) | 0.03% | $333,700 | — |
| SPUS | 0.45% | $328,100 | ~$5,600 |
| HLAL | 0.50% | $327,400 | ~$6,300 |
Assumes 10% gross return, fees deducted annually, no additional contributions. Actual returns will differ — this isolates the fee impact only. The gross return assumption is hypothetical and is not a projection of SPUS, HLAL, or VOO performance.
The 0.05% gap between SPUS and HLAL is not a decision factor. On $50,000, it is $25/year — less than a single stock trade commission used to cost. Pick the fund based on index methodology, holdings, and AUM liquidity, not on a 5-basis-point fee difference.
3-year and 5-year performance: the tracking cost of Shariah screening
Here is where the real comparison matters. Past returns are not projections — but they show you the historical cost of screening and help you set expectations.
| Period (through mid-2026) | SPUS (annualized) | HLAL (annualized) | S&P 500 (approx.) |
|---|---|---|---|
| 1 year | ~38.3% | ~40.7% | ~36–40% |
| 3 years (annualized) | ~23.2% | ~20–22% | ~23–25% |
| 5 years (annualized) | ~17.0% | ~15.5% | ~17–19% |
Sources: fund provider data, ETF comparison tools (PortfoliosLab, etf.com, Yahoo Finance). Returns are approximate total returns including dividends, as of late May / early June 2026. Past performance does not predict future results. Verify current figures at your brokerage before making investment decisions.
Three patterns to notice:
- SPUS has outperformed HLAL on a 3-year and 5-year basis. The ~1.5–2 percentage point annualized gap is largely explained by SPUS’s heavier NVIDIA weighting during the 2023–2025 AI rally.
- On a 1-year basis, HLAL slightly outperformed SPUS. Shorter windows can flip the ranking — do not pick a fund based on trailing 1-year returns.
- Both trail the unscreened S&P 500 on a 5-year basis by approximately 1–3 percentage points annualized. That gap is the measurable cost of Shariah screening — mostly from missing the financial sector’s contribution.
Worked example: $10,000 invested 3 years ago in each fund
Suppose you invested $10,000 in each of these three options in mid-2023 and held through mid-2026. Using the approximate 3-year annualized returns above:
$10,000 invested mid-2023 → mid-2026 (approximate, based on 3-year annualized returns)
| Fund | 3-yr annualized | $10,000 grows to | Gain | Tracking cost vs. S&P 500 |
|---|---|---|---|---|
| S&P 500 (VOO) | ~24% | ~$19,070 | $9,070 | — |
| SPUS | ~23.2% | ~$18,680 | $8,680 | ~$390 |
| HLAL | ~21% | ~$17,720 | $7,720 | ~$1,350 |
Calculated using the compound formula: $10,000 × (1 + annualized return)³. All figures approximate. HLAL’s 3-year annualized return is estimated from 5-year and 1-year data — verify against the fund’s fact sheet for the exact figure. Past returns are not projections of future performance.
On $10,000 over three years, the “cost of halal” was roughly $390 (SPUS) to $1,350 (HLAL) versus the unscreened S&P 500. That gap fluctuates year to year — in tech-heavy rallies it shrinks; in financial-sector rallies it widens. On a $100,000 portfolio, multiply by 10: the tracking cost is approximately $3,900–$13,500 over the same 3-year window.
This is not a reason to avoid halal ETFs. It is the number you should know so you can make an informed decision rather than a hopeful one.
Why returns diverge from the S&P 500 — and when halal ETFs can actually win
Three forces drive the tracking difference:
- Sector exclusion. Removing financials (~13% of the S&P 500) is the single largest performance drag in years when banks outperform. In 2022, when rising rates helped bank earnings, this hurt halal ETFs. In 2023, when tech dominated, it helped.
- Concentration effect. With ~200 holdings instead of ~500, each position has more influence. The top 5 stocks in SPUS represent ~47% of the fund versus ~27% of the S&P 500. A single bad quarter for NVIDIA can materially impact SPUS.
- Expense ratio drag. The 0.42–0.47% extra annual fee versus VOO compounds. Over short periods it is invisible; over 10–20 years it is $5,000–$10,000 per $50,000 invested.
When halal ETFs outperform the S&P 500: in tech-led rallies where financial stocks lag. This happened in meaningful stretches of 2023 and parts of 2024–2025. It is not a structural advantage — it is a sector bet that sometimes pays off. Do not expect halal ETFs to systematically beat the broad index. Expect them to track within a few percentage points, with the direction of the gap depending on the tech-vs-financials cycle.
SPUS vs. HLAL: which one should you pick?
Neither fund is objectively “better.” The choice depends on what you prioritize:
| If you want… | Pick | Why |
|---|---|---|
| Closest S&P 500 proxy | SPUS | It literally starts from the S&P 500 and removes non-compliant stocks |
| Lower expense ratio | SPUS | 0.45% vs. 0.50% — marginal, but SPUS wins |
| Larger AUM / better liquidity | SPUS | $2.4B vs. $722M — tighter bid-ask spreads |
| Less tech concentration | HLAL | ~45% tech vs. SPUS’s ~59% — more sector balance |
| Lower single-stock risk | HLAL | No single position at 15% — largest holding is ~13% |
| FTSE-based screening methodology | HLAL | If your Shariah advisor prefers the Yasaar/FTSE methodology |
If you have no strong preference on screening methodology and want the lowest-cost, most-liquid halal S&P 500 proxy, SPUS is the default choice. Its larger AUM means tighter spreads, its lower expense ratio compounds in your favor, and its S&P-branded index is the closest structural match to the conventional S&P 500.
If tech concentration concerns you — and it reasonably could, given that SPUS has nearly 15% in a single stock — HLAL offers modestly better diversification across sectors. You pay 5 basis points more in fees for that.
Where to hold these funds: account-type considerations
Both SPUS and HLAL are US-listed ETFs available on any major brokerage (Schwab, Fidelity, Vanguard, Interactive Brokers). Where you hold them matters for tax efficiency:
- Roth IRA: ideal for halal equity ETFs. Growth compounds tax-free, and withdrawals after 59½ are tax-free. If your halal ETF grows at 15%+ annualized, the Roth shelter is extremely valuable. The 2026 contribution limit is $7,500 ($8,500 with catch-up for age 50+). Income phase-out: single $150K–$165K, MFJ $236K–$246K.
- Traditional IRA: tax-deferred growth. You pay ordinary income tax on withdrawals. Works well if you expect to be in a lower bracket in retirement.
- Taxable brokerage: you owe taxes on dividends (annually) and capital gains (when you sell). Both funds distribute small dividends — you will owe tax on those each year, plus you need to track dividend purification amounts for charity.
- 401(k): only available if your plan has a self-directed brokerage window. Most do not.
The screening methodology gap: what each index actually excludes
Both indexes apply a two-stage screen. Stage 1 is business-activity exclusion (qualitative): what does the company do? Stage 2 is financial-ratio exclusion (quantitative): how much debt, interest income, and cash does the company carry relative to market cap?
Stage 1: business-activity screens (both funds)
- Conventional banking and insurance (riba-based lending/underwriting)
- Alcohol production and distribution
- Pork-related products
- Tobacco
- Gambling and casinos
- Adult entertainment
- Weapons and defense (SPUS additionally excludes aerospace & defense, financial exchanges & data, and data processing & outsourced services sub-industries)
Stage 2: financial-ratio screens
Both methodologies apply ratio thresholds — but the specific thresholds and denominators differ between the S&P and FTSE versions. Common ratios include:
- Debt-to-market-cap: must be below a threshold (typically 33%)
- Cash and interest-bearing securities to market cap: must be below a threshold (typically 33%)
- Accounts receivable to market cap: must be below a threshold (typically 49% for S&P, 50% for FTSE)
The practical effect: a company with debt-to-market-cap of 34% would fail both screens. A company at 32% passes both. The edge cases — where S&P and FTSE threshold differences matter — explain why the two funds hold different stocks and weight them differently.
The bottom line
SPUS and HLAL are the two real options for a Shariah-compliant S&P 500-like ETF in the US market. Both remove banks, insurers, alcohol, tobacco, gambling, and weapons stocks. Both leave you with a tech-heavy ~200-stock portfolio that tracks the S&P 500 within a few percentage points annually.
SPUS is cheaper (0.45% vs. 0.50%), larger ($2.4B vs. $722M), and has outperformed on a 3-year and 5-year basis — largely because of its heavier NVIDIA weighting during the AI rally. HLAL is slightly more diversified across sectors and avoids the concentration risk of a single stock near 15%.
The tracking cost of Shariah screening — roughly 1–3 percentage points per year versus the unscreened S&P 500 — is real, measurable, and not going away. It is driven by sector exclusion (financials), not by fund mismanagement. Know the cost, build it into your projections, and move on to the decisions that matter more: which account type to hold it in, how much to contribute, and how the equity piece fits into your overall halal portfolio.
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Frequently asked
Both funds are supervised by independent Shariah advisory boards and follow recognized screening methodologies. SPUS tracks an S&P Dow Jones index screened by the S&P Shariah methodology (AAOIFI-aligned); HLAL tracks a FTSE index screened by Yasaar, FTSE's Shariah advisor. Both exclude conventional financials, alcohol, tobacco, pork, gambling, and weapons, and apply financial-ratio screens (debt-to-market-cap, cash-to-market-cap, receivables-to-market-cap thresholds). The screening methodologies differ in details — which is why the two funds hold different stocks and weight them differently — but both are recognized as Shariah-compliant by mainstream Islamic finance scholars. Neither is 'more halal' in a binary sense; they use different but equally credible screening frameworks.
The primary reason is sector exclusion. The S&P 500 includes major banks (JPMorgan, Bank of America, Wells Fargo), insurance companies, and other conventional financial firms that have driven significant returns in rising-rate environments. Halal ETFs exclude these entirely. The secondary reason is the concentration effect: with fewer holdings (~200 vs. 500), halal ETFs are more sensitive to the performance of their top positions, which skew heavily toward technology. In years when tech outperforms financials (2023, parts of 2024–2025), halal ETFs can actually match or beat the S&P 500. In years when financials rally and tech lags, the gap widens. The expense ratio difference (0.45–0.50% for halal vs. 0.03% for VOO) also compounds over time.
Only if your plan offers a brokerage window (sometimes called a self-directed brokerage account or SDBA). Most employer 401(k) plans have a fixed menu of 15–30 mutual funds and do not include individual ETFs. If your plan has a brokerage window through Schwab, Fidelity, or TD Ameritrade, you can typically purchase SPUS or HLAL inside it. If your plan has no brokerage window, your alternatives are limited to selecting the most Shariah-compatible option on the menu (often a large-cap growth fund with minimal financial-sector exposure) or lobbying your plan administrator to add a halal option.
Technically, yes. Even after Shariah screening, some holdings may earn a small percentage of revenue from non-compliant sources (interest income on cash balances, minor non-compliant business lines below the screening threshold). Both funds' Shariah advisors publish periodic purification guidance. The typical purification amount is 1–5% of dividends received, donated to charity. On a $50,000 portfolio yielding roughly 1%, that is $5–$25 per year. It is a real obligation but a small dollar amount for most investors.
As of mid-2026, SPUS at 0.45% is the cheapest US-listed halal large-cap equity ETF with broad S&P 500-like exposure. HLAL at 0.50% is close. There is no halal equivalent of VOO's 0.03% expense ratio — the Shariah screening, advisory board oversight, and smaller asset base all raise costs. If you want lower fees, the only option is direct indexing: buying individual Shariah-compliant stocks yourself in a taxable brokerage account (or a self-directed IRA). That eliminates the fund expense ratio but adds complexity and requires a large enough portfolio to diversify adequately — typically $50,000+ minimum to hold 30–50 individual positions.
Both funds rebalance periodically when their underlying index reconstitutes. The S&P Shariah index (SPUS) and FTSE Shariah index (HLAL) are reviewed quarterly or semi-annually. If a company fails the financial-ratio screens (e.g., its debt-to-market-cap exceeds the threshold) or enters a non-compliant business line, it is removed at the next rebalance. You do not need to monitor individual holdings yourself — that is the point of using a screened index fund. The fund sells the non-compliant stock and reallocates automatically.
Related guides
Halal IRA Options in 2026: Self-Directed vs. Wahed vs. a Brokerage IRA Holding SPUS
Where to hold these ETFs matters as much as which one you pick. This compares the IRA account types available for halal investors.
Rolling a $120K 401(k) Into a Halal IRA After Leaving a Job: The Direct-Rollover Playbook
If you are moving a 401(k) into a halal IRA, you need to know the rollover mechanics before you pick the ETF inside it.
Halal Alternatives to a Target-Date Fund: Building a Glide Path Without Bonds
SPUS and HLAL are the equity piece. This covers how to build the rest of a halal retirement portfolio around them.
Dividend Purification Math: How to Calculate the Amount You Owe to Charity on a $50K Halal Portfolio
Both SPUS and HLAL require dividend purification. This walks through the dollar math on a real portfolio.
Your Employer 401(k) Has No Halal Fund: 4 Ways to Work Around a Limited Menu
If you cannot buy SPUS or HLAL inside your workplace plan, these are your four realistic workarounds.
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