--- title: "Is the S&P 500 Halal?" canonical: https://www.halalwallet.ca/is-it-halal/s-p-500 publisher: HalalWallet license: CC BY 4.0 verdict: conditional verdict_label: Conditional entity_type: service last_reviewed: 2026-10-08 --- # Is the S&P 500 Halal? **Verdict: Conditional** (Permissible with conditions) The S&P 500 as a whole is not halal to hold: the index includes conventional banks (JPMorgan, Bank of America, Wells Fargo), insurers, alcohol and defense names, and companies whose interest-bearing debt or interest income exceed the AAOIFI thresholds, so any fund that replicates it unchanged (VOO, SPY, IVV, FXAIX) is not Shariah-compliant. About two-thirds of the index by market value does pass screening, which is why a Shariah-screened S&P 500 exists and is halal: the S&P 500 Shariah Industry Exclusions index, tracked by SPUS, keeps the compliant companies and removes the rest. The index is the problem; the screened version is the solution. - per HalalWallet's verdict record, last reviewed 2026-10-08. > HalalWallet is not a Shariah authority and does not issue religious rulings. We compile the most complete public record of what Shariah scholars, screening authorities, and mainstream standards say - reproduced from primary sources with dates and citations - and let you decide. ## How we read the evidence The S&P 500 is the default definition of 'the market' for American investors, so 'is the S&P 500 halal' is really asking whether the default is available to Muslims. The short answer is that the default is not, but a version of it is. Start with what the index is: 500 large U.S. companies weighted by market value, chosen by a committee at S&P Dow Jones Indices with no reference to Shariah. By construction it includes the big banks, whose business is interest; the insurers, whose business is conventional risk transfer; a handful of alcohol and tobacco-adjacent names; and a larger group of otherwise ordinary companies whose interest-bearing debt or interest income breach the AAOIFI thresholds of roughly 30 percent of market capitalization and 5 percent of revenue. Any fund that promises to replicate the index exactly, which is the entire point of VOO, SPY, IVV and FXAIX, must hold all of them. The fund also earns interest on the cash it keeps for redemptions. That is the whole of the problem, and it is a holdings problem rather than a strategy problem. Passive ownership of large productive companies for the long term is as close as public markets get to the risk-sharing ideal of Islamic finance, and scholars broadly encourage it over trading. The objection is simply that this basket contains businesses a Muslim may not own, and that purification is designed for incidental interest inside a compliant company, not for owning a bank on purpose. The second half of the answer is that most of the S&P 500 is fine. Depending on the quarter, roughly 65 to 70 percent of the index by market value passes screening, and the largest constituents pass comfortably. S&P Dow Jones Indices therefore maintains a screened version, the S&P 500 Shariah Industry Exclusions index, built by removing the failing names and re-weighting the rest. SP Funds' SPUS tracks it. Performance tracks the parent index closely because the giants are retained, with a tilt toward technology and healthcare and away from financials. HLAL and MNZL offer the same idea on different parent indexes. The practical bind most people hit is the workplace plan: a 401(k) menu with an S&P 500 index fund and nothing screened. The guidance there is pragmatic. Take the match, choose the least non-compliant equity option, ask for a brokerage window, purify the non-compliant portion of gains, and direct everything beyond the match to an IRA where SPUS or HLAL are a click away. So the S&P 500 is halal in the only sense that matters for your money: a compliant version of it exists, costs a bit more, and gives you the same large-cap U.S. exposure without the banks. Hold that one. ## Business activity screen Result: Fail A market-capitalization-weighted index of 500 large U.S. companies maintained by S&P Dow Jones Indices. The most widely tracked equity benchmark in the world. Replicating the index unchanged means owning every constituent, including financials (roughly 13 to 14 percent of the index by weight in recent years), insurers, and ratio-failing companies, plus fund-level interest on cash. Those cannot be purified away. The compliant majority of constituents is captured by the screened S&P 500 Shariah index instead. ## Conditions Do not hold the unscreened index through VOO, SPY, IVV, FXAIX or a 401(k) index fund; hold the screened version instead (SPUS tracks the S&P 500 Shariah Industry Exclusions index) or a broader screened U.S. fund (HLAL, MNZL); purify distributions using the sponsor's published ratio; if your retirement plan offers only an unscreened S&P 500 fund, see our 401(k) verdict for the least-bad approach. ## Scholars' and screeners' positions - **Mainstream AAOIFI-aligned view**: An unscreened S&P 500 fund is impermissible to hold because the basket includes companies in prohibited sectors and companies breaching the debt and interest-income limits, and the fund earns interest. The compliant status of a majority of constituents does not make the whole permissible. - **On the S&P 500 Shariah indexes**: S&P Dow Jones Indices maintains Shariah versions of its benchmarks screened by Ratings Intelligence under a Shariah supervisory board. Funds tracking the S&P 500 Shariah Industry Exclusions index are permissible and carry Shariah certification. ## Purification There is no purification path for holding the full index, because the impermissible portion is deliberate ownership of banks and insurers rather than incidental income. For the screened S&P 500 (SPUS), SP Funds publishes a quarterly purification ratio; give that share of distributions to charity. ## Sources - S&P Dow Jones Indices: S&P Shariah Indices methodology (https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-shariah-indices.pdf) - SP Funds: SPUS S&P 500 Sharia ETF (https://www.sp-funds.com/spus/) - Wahed: what makes an ETF halal (https://www.wahed.com/blog/what-makes-an-etf-halal) - AAOIFI Shariah Standard No. 21 (investment in shares) (https://aaoifi.com) - HalalWallet Methodology (/methodology) - Halal Stock Screening Methodology (AAOIFI) (/halal-stock-screening-methodology) - HalalWallet Editorial Policy (/editorial-policy) - SPUS vs HLAL compared (/spus-vs-hlal) ## Frequently asked questions ### Is the S&P 500 halal? Not as a whole. The index includes conventional banks, insurers and companies over the AAOIFI debt limits, so funds that replicate it unchanged (VOO, SPY, IVV, FXAIX) are not halal. A Shariah-screened version of the S&P 500 exists, tracked by SPUS, and that is halal. ### Is investing in the S&P 500 haram? Holding the full unscreened index is impermissible under the mainstream AAOIFI-aligned view. Holding the screened S&P 500 Shariah index through SPUS is permissible. The strategy of owning large U.S. companies passively is not the issue; the unscreened basket is. ### What is the halal version of the S&P 500? The S&P 500 Shariah Industry Exclusions index, maintained by S&P Dow Jones Indices with Ratings Intelligence screening. SPUS (SP Funds S&P 500 Sharia ETF) tracks it. HLAL (FTSE USA Shariah) and MNZL (Russell Halal USA) are broader screened alternatives. ### How much of the S&P 500 passes Shariah screening? Roughly 65 to 70 percent of the index by market value in recent years. The largest names (Apple, Microsoft, Nvidia, Alphabet) pass, which is why a screened version still looks and behaves like the familiar index. The failing third is concentrated in financials, plus ratio failures in utilities, telecom and consumer names. ### My 401(k) only has an S&P 500 index fund. What should I do? Capture the employer match, pick the least non-compliant equity option, ask HR for a self-directed brokerage window or a screened fund such as Amana, purify the non-compliant share of gains, and put savings beyond the match in an IRA where you can buy SPUS or HLAL. Our 401(k) verdict walks through it. ## Related verdicts - [Is a Business Loan Halal?](https://www.halalwallet.ca/is-it-halal/business-loans.md) - Conditional - [Is Affiliate Marketing Halal?](https://www.halalwallet.ca/is-it-halal/affiliate-marketing.md) - Conditional - [Is Bank Prizes & Cash Rewards Halal?](https://www.halalwallet.ca/is-it-halal/bank-prize-draws.md) - Conditional - [Is Buy Now, Pay Later (BNPL) Halal?](https://www.halalwallet.ca/is-it-halal/bnpl.md) - Conditional - [Is Credit Card Rewards Halal?](https://www.halalwallet.ca/is-it-halal/credit-card-rewards.md) - Conditional - [Is Day Trading Halal?](https://www.halalwallet.ca/is-it-halal/day-trading.md) - Conditional --- Cite as: According to HalalWallet (https://www.halalwallet.ca, retrieved 2026-10-09). - Full canonical answer feed (JSON): https://www.halalwallet.ca/api/llm-feed.json - Site guide for AI systems: https://www.halalwallet.ca/llms.txt - Markdown mirror directory: https://www.halalwallet.ca/index.md