The Ultimate Guide to the Best Shariah-Compliant (Halal) ETFs for 2025

In today’s world, investing is no longer just about chasing returns—it’s about aligning money with meaning. For millions of Muslims in Malaysia and around the globe, halal investing is a way to grow wealth without compromising their values.

This shift has turned Shariah-compliant ETFs into one of the fastest-growing corners of global finance. In just five years, Islamic ETF assets have soared from $326 million (2018) to over $2.33 billion (2023), with no signs of slowing down.

Malaysia, a pioneer in Islamic finance, launched Asia’s first Shariah ETF in 2008 and now boasts seven halal ETFs listed on Bursa Malaysia. Backed by a mature ecosystem and global demand, 2025 marks a pivotal year for investors to tap into this growth.

In this guide, we’ll break down what makes an ETF halal, compare top-performing ETFs in Malaysia and worldwide, and show you how to start investing—whether you’re after gold, tech stocks, or sukuk exposure.

By the end, you’ll know exactly how to build a diversified, high-performing, and Shariah-compliant portfolio that works for both your values and your financial future.

What makes an ETF Shariah-compliant?

At its core, a Shariah-compliant ETF is a modern investment vehicle grounded in timeless Islamic principles. It allows investors to grow their wealth in a manner that is ethical, transparent, and aligned with Islamic law (Shariah). 

These funds go through a robust, multi-layered screening process that filters out prohibited activities and ensures that every underlying asset meets strict ethical and financial standards.

The three foundational prohibitions

Shariah compliance begins with excluding companies involved in activities considered exploitative or harmful. Three core principles underpin this ethical filter:

The two-stage Shariah screening process

To enforce these principles, halal ETFs follow a standardised two-layer screening methodology, typically certified by an independent Shariah Supervisory Board (SSB).

Layer 1: Business activity screening

This qualitative screen filters out companies with core business operations in sectors deemed haram (impermissible). These include:

• Alcohol and tobacco
• Pork-related products
• Conventional finance (banks, insurers, mortgage providers)
• Entertainment (casinos, adult content, mainstream film production)
• Weapons and defence manufacturing

Companies with only minimal incidental exposure to these sectors may still qualify, but only if the majority of their revenue is from permissible activities.

Layer 2: Financial ratio screening

The next filter examines a company’s financial structure. The most widely accepted benchmarks—based on AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) standards—include:

Additionally, any income derived from non-compliant sources must not exceed 5% of total revenue. This "impure" portion must be purified—that is, donated to charity, typically under the guidance of the fund’s manager and Shariah board.

Shariah Supervisory Boards: Who certifies the ETFs?

Legitimate halal ETFs are overseen by a Shariah Supervisory Board (SSB)—a panel of Islamic scholars with expertise in both finance and Islamic jurisprudence. Their role is to:

• Define the screening criteria
• Audit fund holdings on an ongoing basis
• Issue a fatwa certifying the ETF’s Shariah compliance

This governance structure gives investors peace of mind that their investments are continuously aligned with Islamic principles—not just at launch, but throughout the fund’s life.

Malaysia’s regulatory framework: A model for Islamic finance

Malaysia has one of the most sophisticated Islamic capital markets in the world. The Securities Commission Malaysia (SC)—through its Shariah Advisory Council (SAC)—regulates and certifies all Shariah-compliant investments.

Twice a year, the SAC publishes an official list of approved stocks on Bursa Malaysia. As of the latest 2024 update, 817 companies were deemed Shariah-compliant, forming the investment universe for many local ETFs. This ensures Malaysian halal ETFs are built on a deep, regulated, and well-diversified pool of assets—an advantage few other markets can match.

Invest with confidence through Shariah-compliant ETFs

Stay true to your values while growing your wealth. Invest in globally diversified, Shariah-compliant ETFs designed to balance long term growth with ethical investing principles with StashAway Shariah Global Portfolio and enjoy returns from 7.2%* p.a. to 13.8%* p.a..

*Returns as of 31 Jul 2025

The complete list: Shariah-compliant ETFs on Bursa Malaysia (2025)

As of 2025, Bursa Malaysia offers a curated suite of seven Shariah-compliant Exchange-Traded Funds (i-ETFs). These funds provide investors with MYR-denominated access to diverse asset classes, including Malaysian equities, US large caps, ASEAN dividend stocks, Chinese A-shares, physical gold, and even waqf-linked income strategies.

Most of these ETFs are managed by Eq8 Capital (formerly i-VCAP Management), a long-standing leader in Malaysia’s Islamic capital market. These ETFs are designed to meet the needs of investors seeking ethical, diversified, and cost-effective exposure to both local and international markets, all within a Shariah-compliant framework.

Bursa Malaysia-listed Shariah ETFs (2025)

ETF profiles and investment use cases

• Eq8 Dow Jones Islamic Market Malaysia Titans 25 ETF (EQ8MY25)
  Tracks 25 of the largest and most liquid Shariah-compliant stocks on Bursa Malaysia. This ETF is often considered the “core Malaysian halal equity fund,” giving investors simple access to blue-chip names such as Tenaga Nasional and Petronas Chemicals.
• Eq8 Dow Jones US Titans 50 ETF (EQ8US50)
  Provides access to 50 of the largest US-listed Shariah-compliant stocks, including global tech leaders like Apple, NVIDIA, and Microsoft. With a competitive 0.475% total fee, it offers MYR-denominated exposure to US growth without needing a foreign broker.
• TradePlus Shariah Gold Tracker (TRAD)
  Malaysia’s first Shariah-compliant gold ETF, fully backed by physical gold stored in Singapore. The ETF mirrors LBMA gold prices and is physically redeemable at minimum thresholds.
• VP-DJ Shariah China A-Shares 100 ETF (VPDJ)
  Offers halal access to China’s domestic A-shares—an otherwise difficult-to-reach market for retail investors. Tracks the 100 largest Shariah-screened companies in mainland China.
• Eq8 MSCI Malaysia Islamic Dividend ETF (EQ8MID)
  Focuses on Malaysian companies with consistent dividend payouts and strong balance sheets.
• Eq8 MSCI SEA Islamic Dividend ETF (EQ8SID)
  Extends the dividend focus to Southeast Asia, including markets like Indonesia, Thailand, and Singapore.
• Eq8 FTSE Malaysia Enhanced Dividend Waqf ETF (EQ8WAQF)
  Combines Shariah-compliant equity investing with charitable giving. A portion of dividend income is allocated to approved waqf beneficiaries, such as education and healthcare projects.

Each ETF listed on Bursa Malaysia is subject to Shariah screening by qualified scholars and is aligned with the Islamic capital market guidelines set by the Securities Commission Malaysia. For investors looking to build a fully halal portfolio, these ETFs serve as a cost-effective and regulated foundation.

Beyond Malaysia: The best global Shariah-compliant ETFs for 2025

While Bursa Malaysia offers a solid foundation for local investors, expanding your halal portfolio globally opens access to broader diversification, higher liquidity, and sectoral opportunities not available domestically. 

For Malaysian investors with access to international brokers—such as MooMoo, Webull — the US and European markets offer some of the world’s largest and most cost-efficient Shariah-compliant ETFs.

These funds are backed by globally recognised index providers, audited by independent Shariah boards, and often come with lower expense ratios than local equivalents.

A. United States-listed Shariah-compliant ETFs

US-listed halal ETFs are typically favoured for their high assets under management (AUM), deep liquidity, and strong sectoral coverage, especially in technology and real estate. They are priced in USD and are accessible via most global brokers.

B. Europe & Ireland-listed (UCITS) Shariah-compliant ETFs

UCITS ETFs (Undertakings for Collective Investment in Transferable Securities) are domiciled in Europe and are often preferred by non-US investors, including Malaysians, due to favourable dividend withholding tax rates and wider regional access.

These ETFs are typically listed on platforms like London Stock Exchange (LSE) or Deutsche Börse (XETRA) and may be available via IBKR or regional platforms that support UCITS ETFs.

For Malaysian investors, these ETFs offer:

• Lower average costs than actively managed funds
• Natural portfolio diversification into developed and emerging economies
• Potential tax advantages over US-domiciled ETFs (depending on broker jurisdiction and structure)

What to watch out for: key risks and considerations

1. Currency risk
   Investing in foreign ETFs—especially those denominated in USD—introduces currency exposure. For instance, Malaysians investing in SPUS or HLAL face USD/MYR fluctuations.  
   
   A strengthening Ringgit may erode returns when converting back to MYR. To mitigate this, some investors may prefer MYR-denominated international ETFs, such as EQ8US50, which offers exposure to US markets without direct FX risk.  
2. Liquidity Risk
   Liquidity can vary significantly between ETFs. While US-listed ETFs like SPUS trade with high volume and narrow bid-ask spreads, some locally-listed ETFs on Bursa Malaysia experience thinner trading activity.   
   
   This can result in wider bid-ask spreads—effectively a hidden cost for investors. Always check average daily trading volume before committing capital, especially for long-term strategies.
3. Cost premium of compliance
   Halal ETFs require ongoing screening, quarterly audits, and certification from Shariah boards. This operational complexity leads to higher total expense ratios (TERs). The average halal ETF has a TER of around 0.3 - 0.65%, compared to 0.03%–0.10% for the most efficient conventional ETFs like VOO or SPY.   
   
   Investors should view this premium as a necessary cost for maintaining religious and ethical integrity in their portfolios.
4. Zakat obligation
   Zakat is a key pillar of Islamic wealth management. Investors in Halal ETFs are required to calculate and contribute zakat based on the fund’s zakatable portion. Most ETF providers disclose this percentage annually. For example: 
   
   - SPUS: approximately 11.7% zakatable
   - HLAL: approximately 14.2% zakatable
   
   To calculate zakat, apply 2.5% to the zakatable portion of your holding. For example: If you hold RM10,000 in SPUS, the zakatable amount is RM1,170 (11.7%).  
   
   Zakat payable: RM1,170 × 2.5% = RM29.25
   
   This calculation should be performed annually, and many providers include a purification or zakat guide in their annual reports.

Where and how to buy ETFs in Malaysia

1. Through the Malaysian stock market (Bursa Malaysia)

You can directly invest in Shariah-compliant ETFs listed on Bursa Malaysia—such as the Eq8 US Titans 50 ETF or TradePlus Shariah Gold Tracker—through any local broker with Bursa access.

Steps to get started:

• Open a CDS and trading account: This is your gateway to the local stock market.
• Choose a local broker: Popular options include:

• Fund your account: Use FPX to transfer MYR from your bank (e.g. Maybank, CIMB, RHB).
• Search and buy ETFs: Look up tickers like 0827EA (Eq8 US Titans 50) or 0828EA (Gold ETF) and place your trade—just like buying a stock.

2. Through an international broker (US, UK, Ireland-listed ETFs)

International markets offer wider ETF selection, deeper liquidity, and often lower fees. Platforms like Moomoo and Webull now support Malaysians and offer direct access to U.S.-listed ETFs like SPUS, HLAL, and SPSK.

Top brokers for global ETF access:

Important tips:

• Account funding: Usually via international transfer (Wise, Maybank FX, etc.).
• Currency: You'll trade in USD—factor in FX fees and conversion rates.
• Compliance: These brokers are regulated, but always declare foreign holdings if needed for tax/Zakat.

3. Through a robo-advisor like StashAway

If you’re looking for a simple, automated way to invest in Shariah-compliant ETFs, StashAway’s Flexible Portfolios offer a unique solution. Unlike traditional robo-advisors that limit you to pre-built strategies, StashAway lets you custom-build a portfolio using individual ETFs—including several Halal options.

With just a few clicks, you can create a diversified portfolio made entirely of Shariah-compliant global ETFs, all managed and rebalanced automatically by StashAway.

Here are some of the Halal ETFs you can invest in via StashAway:

With no lock-ins, low minimums, and automated rebalancing, StashAway Flexible Portfolio makes it easy for Malaysian investors to access Halal global markets without the complexity of DIY investing.

Choose from a list of funds that best matches your budget, risk-appetite and values!

Invest with StashAway Shariah Global Portfolio

Stay true to your values while growing your wealth. Invest in globally diversified, Shariah-compliant ETFs designed to balance long term growth with ethical investing principles with StashAway Shariah Global Portfolio and enjoy returns from 7.2%* p.a. to 13.8%* p.a..

*Returns as of 31 Jul 2025

Final verdict: Are Halal ETFs a smart investment for 2025?

Absolutely. Halal ETFs have matured into a credible and competitive investment vehicle—offering both strong financial performance and uncompromising adherence to Islamic values. In 2025, they stand not as an alternative, but as a core part of any modern, ethically aligned portfolio.

The best strategy this year is a diversified one:

• For growth: US-focused ETFs like SPUS, HLAL, or the MYR-based EQ8US50 give access to global innovation and tech-led upside.
• For stability: A defensive position in Shariah Gold (GOLDETF) or global Sukuk (SPSK) helps cushion against volatility.
• For local/regional balance: ETFs like EQ8MY25 (Malaysia) or EQ8SID (Southeast Asia) add income potential and home-currency exposure.

More accessible than ever—via local brokers or robo-advisors like StashAway Flexible Portfolios—Halal ETFs offer Muslim investors a principled path to long-term wealth creation.

They’re not just the right choice for your values. They’re the smart choice for your portfolio.