Is HLAL Halal? The 2026 Shariah Verdict for Investors

The verdict in one line

HLAL is halal. The Wahed FTSE USA Shariah ETF holds only US large- and mid-cap stocks that pass a formal Shariah screen, it carries a Fatwa certification on its underlying index, and it costs 0.50% per year. The only step buyers routinely skip — and the reason some assume “screened” means “done” — is the quarterly purification of incidental interest income. Handle that, and HLAL is a clean core US-equity holding for a Muslim portfolio.

Below we apply the AAOIFI Standard 21 screen to HLAL’s actual structure, show you the holdings basis, name the one thing most people miss, and give you the decision lever between HLAL and its closest competitor.

What HLAL actually is

HLAL is the Wahed FTSE USA Shariah ETF, launched July 16, 2019. It tracks the FTSE Shariah USA Index — a subset of large- and mid-cap US stocks drawn from the broader FTSE US universe, then filtered against Shariah rules. The Shariah screening is performed by Yasaar Ltd, an independent Islamic-finance advisory, and the index has been certified Shariah-compliant through a formal Fatwa. The fund rebalances quarterly, distributes once a year, and is custodied at U.S. Bank.

In plain terms: instead of buying the whole US market and hoping it is compliant, HLAL buys only the companies that survive the screen. That is the entire value proposition — you outsource the stock-by-stock Shariah check to a methodology that re-runs every quarter.

Running the AAOIFI screen on HLAL

The standard most strict screeners use is AAOIFI Shari’ah Standard 21. It is a two-stage test. HLAL’s entire index methodology is built to enforce it, so the fund passes by construction — but here is exactly what each stock inside it has to clear.

Stage 1: business activity

A company fails if more than 5% of its revenue comes from any of: conventional (interest-based) banking and insurance, alcohol, tobacco and cannabis, gambling, pork, adult entertainment, weapons and defense, or conventional music and media. This is why HLAL holds no JPMorgan, no Bank of America, no Berkshire Hathaway — conventional financials are the single biggest exclusion. The S&P 500 keeps roughly 13% of its weight in financials; HLAL screens it to essentially zero.

Stage 2: the financial ratios

Even a company in a permissible business can fail if its balance sheet is too leveraged with interest. Standard 21 sets three ceilings:

The FTSE/Yasaar thresholds (33.33%) are a touch looser than the strict AAOIFI 30% on the debt and cash ratios. That is the one place a hardline AAOIFI follower might quibble: a stock with debt at, say, 31% of total assets clears the FTSE screen HLAL uses but would fail the strict AAOIFI 30% line. In practice the gap affects very few holdings, and HLAL still excludes everything that breaches the income screen — the screen that actually drives most disqualifications.

What’s inside HLAL right now

Because conventional finance is screened out, HLAL skews toward technology, healthcare, consumer, and industrials. As of mid-2026 the largest positions were the screened mega-cap technology names — Apple (around 13.5%), Microsoft (around 9.1%), and Alphabet (around 6.3%) — with the top 10 holdings making up roughly 54% of the fund across about 211 stocks.

• Held: Apple, Microsoft, Alphabet, and other tech, healthcare, and consumer names that pass both screens.
• Excluded: JPMorgan, Bank of America, Wells Fargo, Berkshire Hathaway, and the rest of the conventional-finance complex.
• Consequence: HLAL is more concentrated in tech than the S&P 500. It tends to lead when tech rallies and lag when banks and energy lead. That is a feature of Shariah screening, not a flaw — but know it before you buy.

Holdings change every quarter at rebalance. Wahed publishes the live holdings file, and you can re-verify any individual position through Musaffa or Zoya if you want a name-by-name check.

What most people miss: purification

Here is the part that trips up even careful investors. Passing the screen does not mean a holding earns zero interest. A compliant company still parks idle cash, holds receivables, and earns small amounts of incidental interest. AAOIFI’s answer is purification: you calculate the share of your dividend attributable to that impermissible income and donate it to charity. It is not tax-deductible, and it is genuinely small — but skipping it leaves your return partly “unpurified.”

The good news: Wahed does the hard part. It publishes a quarterly purification report stating the percentage of each HLAL distribution you should donate. Your job is to apply that percentage to the dividends you received and give that amount away. On a portfolio throwing off, say, $400 of HLAL dividends a year with a 2% purification rate, that is roughly $8 to charity — trivial in dollars, but the step that separates “bought a halal fund” from “held it the halal way.”

HLAL vs the alternatives

HLAL is not the only screened US large-cap fund. Its closest peer is SPUS (the SP Funds S&P 500 Sharia Industry Exclusions ETF), and the active alternative is the Amana family. Here is the honest comparison.

All four are compliant. The choice is not about which is “more halal” — it is about cost, the underlying universe, and what role the fund plays in your portfolio. HLAL and SPUS are the two index options for the core US-equity sleeve; SPSK is the income/sukuk sleeve that replaces interest-paying bonds; Amana is the active option if you want a manager rather than an index, at roughly double the fee.

Holding HLAL in a Roth IRA, 401(k), or HSA

A common worry: “Is a Roth IRA halal?” The account itself is just a tax wrapper — it is neither halal nor haram on its own. What matters is what you hold inside it. Put HLAL inside a Roth IRA and the whole thing is compliant. The wrinkle is access:

• IRA (Traditional, Roth, SEP): Open one at any broker that lists HLAL — Fidelity, Schwab, and most major brokers carry it. Buy HLAL inside. Done.
• 401(k): Most employer plans do not offer HLAL or any halal fund, and the default target-date and bond options hold interest instruments. If your plan has a self-directed brokerage window, use it to buy HLAL; if not, contribute enough to capture the employer match, then direct additional savings to a halal IRA.
• HSA: Many HSA providers offer a brokerage tier — HLAL inside an investing HSA is compliant and tax-advantaged.

HLAL vs VOO: the performance trade-off, honestly

The question behind the question is usually: “If I buy HLAL instead of VOO, what do I give up?” Be honest with yourself here. VOO (Vanguard S&P 500) holds the full index, including the conventional banks, insurers, and financials that HLAL screens out. That exclusion is the whole point — but it has real performance consequences in both directions.

• When banks and energy lead the market, VOO will tend to outperform HLAL, because HLAL owns none of the financials and screens out much of conventional energy’s most leveraged names.
• When technology leads, HLAL often outperforms VOO — its tech concentration (Apple, Microsoft, Alphabet near the top) is higher than the S&P 500’s.
• The fee gap is real but small: HLAL’s 0.50% versus VOO’s 0.03% is a 0.47% annual difference — about $47/yr per $10,000. That is the cost of the screening service, and for a Muslim investor it is not optional spending; VOO is not a permissible alternative.

The takeaway is not “HLAL beats VOO” or the reverse — it is that for a Muslim investor the comparison is moot. VOO fails the screen, so the relevant choice is HLAL versus SPUS versus Amana, all of which are compliant. Compare those on fee and holdings, and accept the tech tilt and the fee as the price of compliance.

The disclaimer that matters

This applies the AAOIFI Shari’ah Standard 21 screen to publicly available holdings data as of June 23, 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.

The decision lever

If you want a screened, Fatwa-certified, low-cost US large-cap fund and you would rather not check individual stocks every quarter, HLAL does the job at 0.50%. The single number that decides HLAL versus SPUS is the fee — SPUS is five basis points cheaper (0.45% vs 0.50%) — balanced against which underlying universe you prefer (FTSE Shariah USA versus a screened S&P 500). Both are compliant; pick on cost and holdings, not on halal status.

Then do the one thing most buyers forget: pull Wahed’s quarterly purification report and donate the stated slice of your dividends. That step, not the ticker, is what makes the holding fully halal.

Key takeaways

• Verdict: HLAL is halal. It tracks the FTSE Shariah USA Index, is screened by Yasaar Ltd, and is Fatwa-certified.
• Fee is 0.50% ($50/yr per $10,000), a touch above SPUS at 0.45%. Ignore third-party quotes of 0.65% or 0.49% — the issuer figure is 0.50%.
• It excludes conventional finance — no JPMorgan, no Bank of America, no Berkshire — which is why it skews tech-heavy and behaves differently from the S&P 500.
• Purification is required even though the fund is screened. Wahed publishes a quarterly percentage; donate that slice of your dividends to charity.
• Wrappers are fine: hold HLAL in a Roth IRA, IRA, or HSA freely. In a 401(k), use a brokerage window or route extra savings to a halal IRA.
• Re-verify holdings via Musaffa or Zoya, and treat this as screening methodology — not a fatwa.