Halal ETF: The Best Options for Canadian and US Muslim Investors Building a FIRE Portfolio

Financial Freedom & Money Mindset

By Faris

If you read our guide on how to invest for FIRE and started looking up VEQT or XEQT, there’s a decent chance you stopped halfway through opening a brokerage account and thought:

Wait, does this fund own bank stock?

You weren’t overthinking it. That question sits at the center of a real, ongoing debate among Muslim investors, and I’m not going to pretend there’s a tidy answer that closes the conversation.

What I can do is walk you through what a halal ETF actually is, which options are available to investors in Canada and the US, how the account choice can affect Canadian investors, and where the honest disagreements still are.

One thing upfront. I’m not a scholar, and this article isn’t a fatwa. It’s a financial explainer written the same way I’d explain TFSAs or RRSPs, except this time the framework isn’t just tax law. It also involves Shariah screening criteria.

For the religious ruling itself, talk to an imam or scholar you trust. For the investing mechanics, keep reading.

1. 01. What Makes a Halal ETF Different From Regular Index Funds?
2. 02. The halal ETF options available in Canada and the US
3. 03. Halal ETFs and TFSA/RRSP: what Canadian investors need to know
4. 04. Beyond a Halal ETF: Other Shariah-Compliant Investments
5. 05. How to think about zakat on your halal ETF portfolio
6. 06. DIY investing or a managed halal portfolio?
7. 07. Frequently Asked Questions

What Makes a Halal ETF Different From Regular Index Funds?

Here’s the uncomfortable starting point.

Almost every publicly traded company on earth keeps some cash in an interest-bearing bank account. That’s not a loophole; it’s simply part of how corporate treasury management works.

So if your definition of “halal” requires zero exposure to riba anywhere in the chain, no mainstream stock, ETF, or index fund is likely to satisfy that standard completely. That’s one reason Islamic finance organizations and index providers use screening methodologies rather than a simple blanket rule.

A commonly used Shariah-screening approach, built on AAOIFI standards, looks at two broad areas.

First, business activity. Companies whose core businesses involve activities considered impermissible under the relevant Shariah methodology can be excluded outright. Common examples include conventional banking and insurance, alcohol, gambling, pork-related products, certain weapons businesses, tobacco, and adult entertainment.

The exact revenue threshold can vary. For example, Wealthsimple’s current WSHR description says companies deriving more than 5% of their income from specified prohibited activities are excluded. That 5% figure belongs to WSHR’s stated screening approach and shouldn’t automatically be presented as a universal Shariah rule for every ETF.

Second, financial ratios. Companies that pass the business-activity screen can still have financial exposure that needs to be assessed, through factors like interest-bearing debt and income from non-permissible sources. This is where you’ll sometimes see numbers such as 33% or 30% discussed in Shariah-investing literature, most often tied to a debt-to-market-cap ratio.

The important distinction: these numbers are screening thresholds used by particular methodologies, not a universal Zakat formula. The exact formula, denominator, and treatment of debt and cash can differ between index providers and Shariah boards. Check the methodology of the specific ETF you’re considering rather than assuming every “halal ETF” uses exactly the same formula.

Where the honest disagreement lives is whether this type of screening is a legitimate application of fiqh principles such as taba’iyyah, where a minor incidental element doesn’t redefine something whose core is permissible, and umum al-balwa, where something impermissible is so widespread that complete avoidance becomes genuinely impractical.

Other scholars take a stricter position and argue that even incidental interest exposure should disqualify an investment. Some investors therefore prefer physical assets or direct ownership of businesses instead.

I’m not going to tell you which interpretation is right. That’s a question for you and a scholar you trust. What I can tell you is what the screening-based halal ETF options actually look like, since that’s the part that’s primarily about investment mechanics.

The halal ETF options available in Canada and the US

Before the fund picks, one thing is worth saying plainly: VEQT and XEQT, the two all-in-one ETFs we discussed in the FIRE investing guide, are not designed as Shariah-compliant funds. Their portfolios include conventional financial companies and other businesses that wouldn’t pass the business-activity screens used by Shariah-compliant equity indexes.

If you’re investing for FIRE and specifically want a Shariah-screened ETF, you’re looking at a different group of funds. Here’s what’s actually on the table in 2026:

The only Canadian-listed name here is WSHR; the other four trade on US exchanges.

SPUS launched December 2019 and is currently the largest US-listed halal equity ETF by assets. Over the trailing 12 months it returned approximately +24.2%, ahead of the S&P 500’s +19.3% over the same period, largely on the back of its heavier tech-sector weighting once conventional financials get screened out.

HLAL launched in 2019, holds around 210 positions, and its trailing 12-month return came in around +29.7%.

MNZL is the newest addition to this list, launched by Manzil, a Toronto-based Islamic fintech, on Nasdaq in late 2025. At a 0.40% expense ratio it’s currently the cheapest broad-market halal ETF available, and with roughly 461 holdings it’s also the most diversified of the US-listed options. Worth knowing: Manzil is a Canadian company, but MNZL itself is US-listed, not Canadian-listed, so the same TFSA/RRSP withholding tax considerations below apply to it the same way they apply to SPUS or HLAL.

UMMA launched January 2022 and lists the highest expense ratio of the group. Its benchmark gives it non-US, international exposure, distinct from SPUS, HLAL, and MNZL. Its trailing 12-month return of roughly +36.5% was the strongest of the group, though international funds like this one carry currency exposure the US-only funds don’t.

WSHR is the only Canadian-listed option in this group, tracking roughly 160 developed-market holdings. Shariah screening is certified by Ratings Intelligence Partners, the same firm that certifies SP Funds products. Because it trades in CAD, its AUM is also denominated in Canadian dollars, which makes direct comparisons with the US-listed funds above a bit apples-to-oranges.

There’s an important difference between these funds that gets lost when people simply call them “halal ETFs.” SPUS, HLAL, and MNZL largely overlap with each other, since they’re all drawing from a similar pool of large-cap US companies once the screen is applied. UMMA focuses on international equities outside the US. WSHR provides developed-market exposure across several countries and adds a quality and low-volatility approach. None of them should automatically be treated as a perfect one-for-one replacement for VEQT or XEQT.

Performance figures above reflect trailing 12-month returns as of mid-2026 and will already be out of date by the time you’re reading this. Verify current figures directly with each fund before investing; past performance doesn’t predict future returns.

If that distinction matters to you, check the actual methodology and holdings before investing rather than assuming “Shariah-compliant” means every activity of every company aligns with every personal value you hold.

If you want to go deeper than this overview, Halal Terminal maintains a free, regularly updated comparison tool covering every US-listed halal ETF holding by holding, worth bookmarking if you’re the type who likes to check under the hood yourself.

Halal ETFs and TFSA/RRSP: what Canadian investors need to know

If you’re holding a US-listed fund such as SPUS, HLAL, MNZL, or UMMA, the account you use can affect your tax situation.

Under the Canada-US tax treaty, US-source dividends paid to Canadian residents are generally subject to a maximum 15% US withholding tax in ordinary circumstances.

A US-listed ETF held in a TFSA can have that US withholding tax applied to its US-source dividends. An RRSP generally receives more favorable treaty treatment for US-source dividends, which is why Canadian investors often treat the RRSP as the more tax-efficient registered account for US-listed ETFs.

WSHR sidesteps this specific issue since it’s Canadian-listed. That doesn’t mean Canadian investors pay no taxes anywhere in the chain, it just means the US-listed-ETF withholding question doesn’t apply to it directly.

And one more important point: the CRA doesn’t determine whether an investment is religiously halal. TFSA and RRSP are Canadian tax wrappers. Whether a particular investment satisfies your religious requirements is a separate question that depends on the investment itself and the Shariah methodology you follow. For the tax side, use current CRA and fund-provider information. For the religious side, use the relevant Shariah methodology or consult a qualified scholar.

Beyond a Halal ETF: Other Shariah-Compliant Investments

If the screening-based approach doesn’t sit right with you, or you simply want to diversify beyond equity ETFs, here’s what’s worth understanding.

Physical gold and precious metals. Buying physical gold and holding the underlying asset directly avoids the need to evaluate an operating company’s business activities. The tradeoff is that precious metals don’t generate corporate earnings the way stocks do, so they play a different role in a portfolio.

Gold and precious-metals ETFs. This is where it gets more complicated. Some investors are comfortable with physically backed precious-metals funds. Others distinguish between direct ownership of physical metal and shares in a fund that holds or tracks that metal. Check exactly what the fund owns and how redemption works before assuming it’s equivalent.

Halal REITs. Real estate can add diversification, but structure matters, since a REIT’s tenant mix and financing still need to pass business-activity and financial screening. SP Funds, for example, offers SPRE, the SP Funds S&P Global REIT Sharia ETF, with a 0.50% expense ratio.

Starting your own business. Direct ownership of a genuinely halal business sidesteps the screening questions tied to publicly traded companies entirely. The tradeoff is diversification and risk. A single business can fail, and it requires time, capital, and active involvement in a way a diversified ETF portfolio doesn’t.

None of these alternatives is automatically better than a halal ETF. They’re different tools with different risk, liquidity, diversification, and religious considerations attached.

How to think about zakat on your halal ETF portfolio

Zakat on investments is one area where a single formula shouldn’t be applied to everyone. Different scholars and Islamic financial institutions use different approaches depending on the type of asset and whether it’s held for trading, long-term investment, or income generation.

The familiar 2.5% figure is associated with many Zakat calculations, but the real question is what amount is actually zakatable under the methodology you’re following. Some approaches treat publicly traded equities as tradeable assets and calculate Zakat on the value of the shares. Others distinguish between the underlying zakatable assets of the company and the investor’s intention and holding period.

This is also where a number like 33% needs to be handled carefully. A percentage used as a Shariah financial-screening threshold is not automatically a Zakat threshold. If a methodology uses a debt or cash ratio of X% to screen a fund, that doesn’t mean an investor should calculate Zakat using X%.

Purification deals with the small portion of income a fund’s Shariah process flags as non-compliant, typically published as an annual purification ratio (SPUS, HLAL, and WSHR all disclose theirs). If a fund distributes $1,000 in dividends over the year with a published 2% purification ratio, you’d donate $20 of that to charity, without expecting religious reward for it, since it’s treated as removing impermissible income rather than as voluntary charity.

If you’re unsure which calculation applies to your situation, ask a qualified scholar or Islamic finance professional who understands both your investment structure and your school of thought.

DIY investing or a managed halal portfolio?

You’ve got several real paths here as a Canadian investor.

DIY through a discount brokerage. Buy WSHR yourself, or use SPUS, HLAL, MNZL, or UMMA where appropriate for your account and tax situation, through a brokerage like Questrade or Wealthsimple Self-Directed. Your main fund-level cost is the ETF’s own fee, plus any trading or currency-conversion costs your brokerage charges. You’re responsible for your own decisions and rebalancing, but it’s the cheapest route once your portfolio grows.

Wealthsimple Halal Portfolio. A managed, hands-off option holding WSHR and rebalancing for you. As of 2026, Wealthsimple lists management fees of 0.50% for Core, 0.40% for Premium, and as low as 0.20% for Generation, plus an underlying MER of roughly 0.25% to 0.50% charged by the fund itself. So the real cost is two layers stacked together, not one headline number. Wealthsimple was the first to offer a dedicated halal portfolio in Canada, launching in 2017.

Manzil / Corex. Worth separating two different things here. The Corex Halal Portfolio is Manzil’s existing managed-portfolio service, available in five risk profiles, holding a mix of Shariah-compliant equities, income investments, REITs, and physical precious metals. MNZL, covered above, is a separate, newer product: a self-directed ETF you can simply buy through a brokerage. If you want a hands-off, diversified multi-asset approach, Corex is the one to look at. If you just want the cheapest broad-market halal ETF, MNZL is the one to buy.

My honest take, the same one we gave in the FIRE guide for conventional ETFs: DIY is the cheaper path once you’re comfortable placing your own trades. A managed option earns its fee if it’s genuinely the difference between staying consistent and not investing at all.

For US readers: Wahed operates a dedicated Shariah-compliant robo-advisor in the US market. If you’re US-based, it’s worth comparing directly against a DIY approach using SPUS, HLAL, or MNZL.

Choosing a halal ETF isn’t just a matter of finding a ticker with “Shariah” attached to it. You need to understand three things: the Shariah methodology behind it, the actual investment exposure (US-only, international, developed-market), and the account and cost structure (TFSA versus RRSP for Canadians, fund fees, currency costs).

As of 2026, SPUS, HLAL, MNZL, UMMA, and WSHR give investors several different ways to build Shariah-screened equity exposure, but they aren’t interchangeable products. These numbers can change, so verify them again before investing.

If the screening-based approach fits your understanding of Islamic investing, these funds are worth researching further. If it doesn’t, physical assets, Shariah-compliant real estate, or direct ownership of a halal business may be the alternatives worth exploring instead.