AAOIFI Shari'a screening · Reviewed July 16, 2026

Is the S&P 500 halal in 2026?

No. The S&P 500 and the funds that track it (SPY, VOO, IVV) are not Shari'a-compliant. Here is why, and the halal index alternatives that are.

No. The S&P 500, and the index funds that track it such as SPY, VOO, and IVV, are not Shari'a-compliant as of 2026. The index holds conventional banks and insurers, alcohol and tobacco producers, gambling companies, and other prohibited businesses, and most of its constituents also carry interest-based debt above the AAOIFI limit. The halal path is a purpose-built Shariah index fund such as SPUS or HLAL, which start from a similar universe but remove non-compliant companies.

The S&P 500 is a market-capitalization index of 500 large U.S. companies, selected purely on size and liquidity with no faith-based screening. That means it deliberately includes sectors AAOIFI Shari'a Standard No. 21 prohibits: conventional banks and financials (a large slice of the index), alcohol and tobacco, gambling and casinos, and defense and adult-content names. Owning the index means owning a share of all of them.

Even setting the prohibited sectors aside, most remaining constituents would need to pass the AAOIFI quantitative screens for debt, interest-bearing securities, and non-permissible income. A meaningful number fail on leverage alone. So the index as a whole cannot be certified halal, even though many individual members (for example Apple, Microsoft, and NVIDIA) pass on their own.

The practical halal replacement is a Shariah-screened index fund. SPUS (SP Funds S&P 500 Shariah Industry Exclusions ETF) starts from the same S&P 500 parent index and removes the non-compliant industries and companies. HLAL (Wahed FTSE USA Shariah ETF) tracks a broad Shariah-screened U.S. index. Both are overseen by Shari'a boards and apply AAOIFI-style screens, and both distribute or guide on purification of the small residual non-permissible income.

If you prefer to build your own basket, you can screen each S&P 500 name individually and keep only the ones that pass, though that requires ongoing monitoring as ratios change each quarter. HalalScreener publishes a live AAOIFI verdict for every S&P 500 constituent, so you can check any of them for free.

Methodology

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

Sources and scholars

  • AAOIFI Shari'a Standard No. 21: Financial Papers (Shares and Bonds)
  • SP Funds Shari'a Supervisory Board (SPUS)
  • Wahed Invest Shari'a Supervisory Board (HLAL)

Frequently asked

Is the S&P 500 halal?

No. The S&P 500 includes conventional banks, alcohol, tobacco, and gambling companies, and many constituents carry interest-based debt above the AAOIFI threshold. The index as a whole is not Shari'a-compliant, even though some individual members pass on their own.

Is VOO or SPY halal?

No. VOO, SPY, and IVV all replicate the S&P 500, so they hold the same non-compliant companies. Shariah-screened alternatives such as SPUS and HLAL remove the prohibited holdings.

What is the halal version of the S&P 500?

SPUS (SP Funds S&P 500 Shariah Industry Exclusions ETF) is the closest mirror, since it starts from the same parent index and screens out non-compliant names. HLAL (Wahed FTSE USA Shariah ETF) is a broader Shariah-screened U.S. equity fund. Both pass AAOIFI-style screens.

Check a verdict yourself

Our screener grades US-listed stocks, ETFs, and crypto against AAOIFI Standard 21, plus major global companies through their US ADRs and Bursa Malaysia listings. The verdict, grade, and debt ratio are free.

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