What is the difference between a halal ETF and an ethical ETF?
They overlap on exclusions and diverge on everything structural.
- Both typically exclude alcohol, gambling, tobacco, adult entertainment and conventional armaments
- Shariah adds the exclusion of interest-based income and conventional financial companies
- Shariah adds financial-ratio screens limiting a company's debt and interest-bearing assets
- Shariah adds purification of incidental impure income
- Shariah requires a Shariah board or adviser and, normally, a certificate
- ESG adds factors Shariah screening does not consider - carbon intensity, labour practices, board composition
An ethical or ESG fund is not a Shariah-compliant fund, and neither label makes the other redundant.
Factual and educational information only. Nothing on this page is financial product advice, a recommendation, or a Shariah ruling. Consider your circumstances and the product's disclosure documents, and seek licensed advice and qualified scholarly guidance before acting.