The main Shariah-compliant investment options are screened stocks, Shariah funds and ETFs, sukuk, physical gold and real estate. Each must avoid interest, excessive uncertainty and prohibited business activity, but each has its own Shariah conditions, risks and liquidity. This guide compares them side by side.
It is general information, not investment advice or a religious ruling. If you are just starting, read our halal investing guide for beginners first.
Comparison table
| Option | Key Shariah condition | Main risks | Liquidity |
|---|---|---|---|
| Screened stocks | Pass business and financial ratio screens | Market volatility, loss of compliance | High |
| Shariah funds and ETFs | Approved methodology and Shariah board | Market risk, sector concentration, fees | High |
| Sukuk | Return linked to an asset or permissible contract | Issuer credit, profit rate changes | Medium |
| Gold | Clear ownership and possession or allocation; no leverage | Price swings, storage costs, no income | Medium to high |
| Real estate | Permissible tenants and non-interest financing | Concentration, maintenance, slow to sell | Low |
Screened stocks
Shares in companies whose main business is permissible and whose finances pass ratio tests on debt, cash and non-permissible income. The S&P Shariah index methodology is one widely used standard; AAOIFI and other providers use different thresholds, so a stock can pass one screen and fail another. Our stock screening guide walks through the tests.
Shariah funds and ETFs
Funds screen and monitor holdings for you and usually handle purification. Check the methodology, the Shariah board, fees and sector concentration, since excluding banks often leaves halal funds heavy in technology. Global Islamic fund assets rose 22% to US$375 billion in 2025, EnterpriseAM reported, citing the ICD-LSEG Islamic Finance Development Report.
Sukuk
Sukuk give investors a share in an asset, project or contract, and returns come from that underlying activity rather than interest. They play the role bonds play in a conventional portfolio. Risks include the issuer’s credit and changes in market profit rates. See our sukuk guide.
Gold
Gold is generally acceptable when you clearly own specific, allocated metal and the purchase is settled without delay or leverage. Be careful with synthetic products, margin trading and unallocated accounts. Gold produces no income and its price can fall.
Real estate
Property can be owned directly, through Shariah-compliant property funds or via Islamic REITs where available. The property must be financed without interest, for example through an Islamic mortgage, and rental income should come from permissible tenants.
How to choose between them
- Match the option to the goal. Stocks and equity funds for long-term growth, sukuk for income and stability, gold as a hedge, property for long-term income if you can tie up capital.
- Check Shariah governance. Look for a named Shariah board and published methodology.
- Check costs and liquidity. Fees, spreads and how quickly you can sell.
- Diversify. Combine several options rather than relying on one.
- Review regularly. Compliance and suitability can both change.
Is Shariah-compliant the same as ethical or ESG?
No. ESG screens focus on environmental, social and governance factors; Shariah screens focus on interest, debt and prohibited sectors. They overlap but are not interchangeable. Investors who care about both should check against both.
FAQ
No investment is risk-free. Highly rated sovereign sukuk and Islamic savings accounts are generally lower risk than stocks or gold.
Conventional bonds pay interest and are generally not Shariah-compliant. Sukuk are the usual alternative.
About USD 375 billion in 2025, according to the ICD-LSEG report as reported by EnterpriseAM.
