AAOIFI Shari'a screening Β· Reviewed May 17, 2026

Halal alternatives to the S&P 500 ETF

If you want broad U.S. equity exposure without the haram holdings of SPY or VOO, here are the three credible halal alternatives and how they compare.

The S&P 500 (SPY, VOO) is not Shari'a-compliant β€” it holds banks, alcohol, gambling, and adult-entertainment names. The three credible halal alternatives are HLAL (Wahed FTSE USA Shariah ETF), SPUS (SP Funds S&P 500 Sharia Industry Exclusions ETF), and the Amana Income / Growth Funds (mutual funds, not ETFs). All three exclude prohibited businesses and apply AAOIFI quantitative screens.

HLAL tracks the FTSE USA IdealRatings Shariah Index. Approximately 200 holdings, expense ratio ~0.50%. Built by Wahed Invest with a documented Shari'a Supervisory Board.

SPUS tracks the S&P 500 Shariah Industry Exclusions Index β€” same parent index as SPY, but with non-compliant industries removed. ~190 holdings, expense ratio ~0.49%. Run by SP Funds with audit from a Shari'a board.

Amana Income (AMANX) and Amana Growth (AMAGX) are actively managed mutual funds from Saturna Capital. Higher expense ratios (~0.95%) but the longest track record of any U.S. halal equity fund. Saturna handles quarterly purification disclosures.

Choosing among them: HLAL has more international exposure than SPUS; SPUS more closely mirrors the U.S. large-cap index. Amana's actively-managed approach can deviate from index performance in either direction β€” read its prospectus before allocating.

Methodology

Verdict applies the methodology of AAOIFI Shari'a Standard No. 21 β€” Financial Papers (Shares and Bonds): qualitative screening for prohibited business activities, plus three quantitative caps β€” interest-bearing debt < 30% of market cap, interest-bearing securities < 30%, and non-permissible income < 5% of revenue.

Sources and scholars

  • Wahed Invest Shari'a Supervisory Board (HLAL)
  • Yasaar Shari'a Advisory (SPUS)
  • Amana / Saturna Shari'a Supervisory Board

Frequently asked

Why is SPY not halal?

SPY (and VOO) replicate the S&P 500, which includes banks (JPM, BAC, WFC), alcohol (BUD, STZ), gambling (LVS, WYNN), and adult entertainment. AAOIFI prohibits direct ownership of any of these.

Is HLAL or SPUS the better halal S&P 500 alternative?

SPUS is the closer mirror to the S&P 500 since it starts from the same parent index. HLAL has broader exposure and a slightly more diversified holdings list. Both pass AAOIFI screens; the choice comes down to which underlying index you prefer.

Are there halal index funds in 401(k) plans?

Increasingly yes β€” Amana Mutual Funds are available in many 401(k) lineups, and HLAL/SPUS can be held in a self-directed brokerage account inside a 401(k) if your plan permits one.