Short answer
A conventional ETF (MSCI World, S&P 500, CAC 40) contains banks, insurers and other excluded companies: it is not compliant. An Islamic ETF tracks an index screened according to Shariah criteria (MSCI, S&P, Dow Jones, FTSE) under the supervision of a board; the non-compliant part of the dividends still has to be purified if the fund does not do so.
What the institutions say
Official positions, with their reference. The badge sums up the institution’s position, not an opinion of Assabile.
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International Islamic Fiqh Academy Organisation of Islamic Cooperation, JeddahUnder conditions
A fund follows the rules of what it holds: no bonds or interest-bearing deposits; shares in companies with a lawful business.
Resolutions 60 (11/6) and 63 (1/7)
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AAOIFI Accounting and Auditing Organization for Islamic Financial Institutions, BahrainUnder conditions
Islamic funds apply the thresholds of standard 21 to their shares, under the supervision of a Shariah board, and purify, or have investors purify, non-compliant income.
Shariah standard 21; standards on funds
Positions are reported as they stand; other scholars may hold other views. Method and disclaimers
Depending on your country
- France
- Islamic UCITS ETFs are available through brokers and unit-linked assurance-vie (life-insurance savings contracts); none was eligible for the PEA (share savings plan) in October 2026. See the guide to France.
- United Kingdom
- Islamic UCITS ETFs can be held in an ISA or a self-invested personal pension (SIPP).
- Türkiye
- Participation funds (katılım fonları) are distributed by banks and platforms; their TEFAS code makes it possible to compare them.
- United States
- Several compliant ETFs are listed in the United States, as well as long-established Islamic mutual funds.
Conventional ETFs and Islamic ETFs
An ETF tracks an index. The major indices contain banks, insurers, and alcohol or gambling companies: an ETF that tracks them carries these activities. An Islamic ETF tracks a screened version of the index: companies with a lawful business, debt and cash ratios below the thresholds (see the Shariah screener), quarterly review.
What to check
- The index methodology (MSCI, S&P, Dow Jones, FTSE) and whether there is a Shariah board.
- Purification: some funds do it themselves, others publish a rate that investors apply to their dividends (see the purification tool). Funds that accumulate dividends also require purification, according to many boards.
- The fund’s cash investments and securities lending: a compliant fund does not engage in them at interest.
- The wrapper: PEA, ISA, life insurance, pension plan.
By country
Islamic UCITS ETFs are available in Europe through brokers; in the United States, several compliant ETFs are listed; in Türkiye, participation funds play this role. See the dated directory of funds and ETFs, which makes no recommendations.
Frequently asked questions
Does a conventional MSCI World ETF become halal with purification?
No: it contains companies whose main business is excluded (banks, insurers, alcohol), which purification does not make lawful. Purification applies only to the small non-compliant part of companies that are admitted.
Are there Islamic ETFs eligible for the PEA?
None in October 2026: the PEA requires at least 75% of shares in European companies, whereas the existing Islamic ETFs invest worldwide or in the United States. The directory shows the eligibility of each fund.