Ethical ETFs and funds: what we cover and how to check one

The short version

A fund that was built from the start to follow Islamic rules, and is overseen by a Shariah board, is a different thing from an ordinary index fund that happens to hold some acceptable companies. We list the first kind. We do not list the second kind as passing. We show it as "under review" and explain why.

What we cover today

Our screener holds 76 funds and ETFs. 25 of them are dedicated Shariah or Islamic funds, and those are the ones carrying the Titan Ethical seal on this page. They include funds listed in the US and UK, sukuk (Islamic bond) funds, an Islamic real estate fund, and several mutual funds from fund houses that run Islamic mandates.

These are not screened by our company ratios. A dedicated fund's index provider and Shariah board apply the screen to every holding, and the fund's documents say so. We do not invent ratios for a fund that does not publish them.

We also check every fund against our boycott watch list. A fund whose basket includes companies on that list keeps its place here and carries the label "Holds companies on our boycott watch list", so you can weigh it yourself. See the boycott tracker for the list.

The table shows each dedicated fund with its name, ticker, where it trades, fund type and the date of our last check. Fund type matters, so we show it. A sukuk fund holds asset-backed certificates rather than loans that pay interest, and many scholars treat that as acceptable. A real estate fund draws more disagreement among scholars, so its row carries a note to confirm with your own advisor.

What is not on the list, and why

Ordinary index funds such as the S&P 500 trackers, Nasdaq trackers and sector funds are not on the list. They hold every company in the index, which includes banks, insurers, alcohol and tobacco makers and heavily indebted firms. A fund is not better than its contents, and these funds are not built to filter them out.

You may still see them in our system. When we do, they are marked "Under review" and the page says that the fund is a conventional basket that has not been individually screened. We take this approach because a green mark on a fund that holds excluded companies would mislead you.

Funds we hold at under review (37) or that do not meet our screen (2)

We are working on a holdings-based check that would compare a fund's disclosed top holdings with our company results and show how much of the basket passes. When it is ready we will show it as a partial view with its limits stated, never as a full pass.

Commodity funds are a separate case. A fund that holds the physical metal, such as gold or palladium, is treated differently from one that trades futures contracts. We leave 10 plain physical-metal trusts (BAR, GLD, GLDM, IAU, IGLD.L, PALL, PPLT, SGOL, SIVR, SLV) off this list, because they are not built to Islamic rules and pass for a different reason. Each fund's page says which kind it is.

How to check any fund yourself

Whether or not it is on our list, these steps work for any ETF or fund.

1. Find the stated mandate. The fund's factsheet should say if it follows a Shariah index. If it does not mention Shariah screening, it is a conventional fund.
2. Find who screens it. Look for the index provider and the Shariah board or adviser. Both should be named.
3. Read the top holdings. Look at the ten largest. Banks, insurers, alcohol, tobacco, gambling and defence names are a sign something is off.
4. Check the fund type. Shares, sukuk, real estate and money market funds each have their own questions. Bond funds that pay interest are not suitable under these rules.
5. Read the purification note. Dedicated funds usually say whether they handle purification for you.
6. Look at cost and size. Check the annual fee, the fund size and the trading volume. Small funds can be costly to trade.

If you want to check the companies inside a fund, paste the top holdings into our ethical screener one by one.

Frequently asked questions