What makes an ETF shariah compliant?

[Mahamoud_Ali]

What makes an ETF shariah compliant? Is there a ratio of compliant to non compliant that makes or breaks it?

Also, I’m interested in investing into cybersecurity ETFs (cibr, ihak, hack, bug). I tried to used the app to verify but not sure if they’re shariah compliant.

[Farhan]

Assalaamu Alykum Mahamoud, welcome to our community! Great to have you with us. That’s a good question.

Our CEO @saad provided the answer below to a similar question on another thread.

If the majority of the companies (eg. 90%) in an ETF are sharia compliant, is it okay to invest in that ETF?

There’s no public fatwa on this, as far as I’m aware, so it really boils down to your own comfort level. In my personal opinion, it would be better to apply the same ~5% rule as individual stocks in the effort to limit your exposure to non-compliant holdings. Even better, use a service like M1 Finance to recreate the ETF using only its compliant holdings.

Here’s a thread that includes a list of ETFs that have less than 10% non-compliant holdings, dated back in January.

Halal ETFs

Has anyone come across any ETF’s that happen to be halal (not including Hlal or spus or the shariah focused ones)? Do you mind sharing? Thanks

Regarding the ETF’s you mentioned, was there any information you’d like to see in more detail?