Is SPUS Halal? The 2026 Shariah Verdict for US Muslim Investors

The short answer, then the screen

Yes, SPUS is halal. It is not a conventional fund with a Shariah label slapped on top — the SP Funds S&P 500 Sharia Industry Exclusions ETF tracks an index that is purpose-built to pass the AAOIFI Shari’ah Standard 21 screen, then layers a quarterly purification step on top. The fund holds roughly $2.07 billion in assets at a 0.45% expense ratio, with a NAV of $48.60 (issuer figures, mid-2026). That makes it the largest and cheapest US halal equity ETF, and the default answer when a US Muslim investor asks “how do I own the S&P 500 without owning the banks.”

But “it’s marketed as Shariah-compliant” is not the same as “it passes the screen.” So let’s actually run it.

How the AAOIFI Standard 21 screen works

There are two stages. A fund or stock has to clear both.

Stage 1 — business activity. A company fails if more than 5% of its revenue comes from conventional/interest-based finance and insurance, alcohol, tobacco, gambling, pork, adult entertainment, weapons/defense, or conventional music/media. This is the rule that knocks out the entire conventional banking sector — a bank’s core business is charging interest, so it fails before you even look at the ratios.

Stage 2 — financial ratios. For the names that survive Stage 1, AAOIFI Standard 21 (the strict standard) applies three tests:

• Interest-bearing debt ≤ 30% of market capitalization.
• Cash plus interest-bearing securities ≤ 30% of market capitalization.
• Impermissible (interest) income ≤ 5% of total income.

Different index providers use slightly looser thresholds — S&P and Dow Jones Islamic use 33%, MSCI and FTSE use 33.33% measured against total assets rather than market cap. SPUS tracks the S&P 500 Shariah index, so it runs the S&P methodology, which is itself AAOIFI-aligned and overseen by a Shariah supervisory board.

Running the screen on SPUS’s actual holdings

The cleanest way to verify a screened fund is to look at what it actually owns. Here are SPUS’s top 10 holdings as of 05/31/2026, pulled from the issuer:

Look at what is not there. The conventional S&P 500 carries JPMorgan, Bank of America, Wells Fargo, and Berkshire Hathaway among its largest names. None of them appear in SPUS — they are screened out at Stage 1 because conventional banking and insurance are interest-based businesses. By construction, SPUS holds zero conventional banks, which is exactly why it tilts so heavily toward technology and healthcare. The fund holds about 200 names total (versus ~500 in the parent index), all of them having cleared both screening stages.

Verdict: SPUS passes the AAOIFI Standard 21 screen. The business-activity test is satisfied by the exclusion methodology; the ratio tests are applied to each surviving holding at the index level and re-run as holdings change. The only residual obligation falls on you — purification.

The part most people miss: purification is still required

Here is where a lot of “is SPUS halal” answers stop too early. Passing the screen does not make a fund 100% clean of impermissible income. Screened companies still hold cash in interest-bearing accounts, and the fund itself parks cash. AAOIFI requires you to purify that incidental interest income — calculate the share of your dividends attributable to it, and donate that amount to charity. It is a gift, not a deduction; you cannot write it off on your taxes.

SP Funds makes this mechanical. It publishes a quarterly purification calculator at sp-funds.com/purification-calculator that gives you a per-share dollar figure for SPUS (and for SPRE and SPSK). You multiply by your share count, donate the result, and your holding is purified. The amounts are small — SPUS’s 30-day SEC yield was just 0.39% as of 05/31/2026, so the dividend stream itself is modest and the impermissible slice of it is a fraction of that — but the obligation is real, and skipping it is the most common mistake screened-fund holders make.

SPUS vs the conventional S&P 500: what you trade for compliance

SPUS is not a free lunch versus VOO or SPY. By dropping the financials sector and ratio-fail names, it ends up with a different risk profile:

Two real trade-offs. First, the fee: SPUS at 0.45% costs 15× what VOO charges at 0.03%. On a $50,000 position that is about $225/year versus $15/year — the price of screening. Second, concentration: with no financials and a heavy tech weight (NVIDIA alone is 13%+), SPUS swings harder than the broad index. In a year when banks rally and tech stalls, SPUS lags VOO; when tech leads, it tends to beat it. That is sector risk, not a flaw — but you should hold it knowing the ride is bumpier than a fully diversified index.

Where SPUS fits, and the compliant alternatives

For most US Muslim investors who want core US large-cap equity exposure, SPUS is the answer — it is the screened version of the index nearly everyone defaults to. But it is not the only compliant choice, and it should not be your entire portfolio:

• HLAL (Wahed FTSE USA Shariah ETF, 0.50%) — the main alternative, tracking the FTSE USA Shariah index with a different screening provider (Yasaar) and ~211 holdings. Slightly pricier, less tech-concentrated.
• SPTE (SP Funds S&P Global Technology, 0.55%) — if you want global Shariah tech rather than US-only.
• AMAGX / AMANX (Amana Growth / Income, 0.86% / 1.01%) — actively managed, US-screened, running since 1986. You pay up for stock-picking; the trade-off is higher fees.
• SPSK (SP Funds Dow Jones Global Sukuk, 0.50%) — the halal “bond” analogue using sukuk, not interest. This is what you pair SPUS with instead of a conventional bond fund — bonds, CDs, HYSAs, and Treasuries are not compliant (riba).
• Allocated gold (GLDM, 0.10%) — permissible under AAOIFI Standard 57 (spot, allocated), a clean diversifier alongside SPUS.

A common build: SPUS for US large-cap, HLAL or AMAGX for diversification within equities, SPSK for the fixed-income sleeve, and a small allocated-gold position. Held inside a Roth IRA, all of it compounds tax-free — and the account wrapper itself raises no Shariah question, since the compliance lives in the holdings, not the IRA.

The disclaimer that matters here

This applies the AAOIFI Shari’ah Standard 21 screen to publicly available holdings data as of 05/31/2026. 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 your goal is to own the US large-cap market the halal way, SPUS is the most direct instrument available: it passes the AAOIFI screen, holds zero conventional banks, runs the cheapest fee in its category at 0.45%, and hands you a quarterly purification number so you don’t have to compute it yourself. The one thing you control — and the one thing most holders forget — is actually making the purification donation each quarter. Buy SPUS for the core, pair it with SPSK and a touch of gold so you’re not reaching for interest-bearing bonds to diversify, hold it in a Roth IRA so the gains never get taxed, and put a quarterly reminder on your calendar to purify. That’s the whole playbook.