Shariah ETFs scale as markets embrace exchange-traded asset bundling

• Total assets hit US$221.1 billion across 104 global funds
• Americas hold 94% of assets, led by gold-backed vehicles
• Europe leads fund diversity with 46 distinct Shariah products

The rise of ETFs marks a pivotal shift in the Islamic investment world, moving it from a fragmented, predominantly active landscape into a more liquid, transparent and institutional-grade ecosystem.

Offering a window into investable Shariah compliant stocks across the world, the asset class has seen explosive growth since BlackRock launched The iShares MSCI World Islamic UCITS ETF in December 2007, providing the first diversified basket of developed stocks that meet Islamic criteria.

Shariah compliant ETFs made further inroads in the US, now their largest market, with Javelin Investment Management’s launch in June 2009 of a basket of Islamic stocks tracking the Dow Jones Islamic Market International Titans 100 Index.

Other markets followed quickly, with the Singapore Stock Exchange listing its first Shariah ETF in 2008, and South Africa its first version in 2009.

The transition from traditional mutual funds to ETFs has since become a turning point for the industry. Higher fees and slower trading of active funds were replaced with the liquidity and transparency of the exchange-traded model.

As of Q4 2025, Shariah compliant ETF funds accumulated an AuM of US$221.1 billion, according to the IFN Investor Funds Database – a near 70-fold growth from the US$3.25 billion the database had tracked as of Q1 2024.

Asset spread and growth

The universe of Islamic ETFs is spread across five regions:

Americas: As the primary hub for institutional-grade ethical portfolios, the US-led Americas is also the biggest base for Shariah ETF funds, with just 13 funds jointly accounting for an AuM of U$207.12 billion, or 94% of the global total.

In Q4 2025 alone, the valuation for US Shariah ETFs grew 17.81% quarter-on-quarter. Several structural and market factors have fueled this dominance. They include flows from the massive gold-backed SPDR Gold Shares ETF, the largest Shariah compliant ETF globally with some US$130 billion in assets.

US stock markets also feature a high concentration of technology and healthcare stocks, which naturally pass Shariah financial screens more easily than the debt-heavy banking sectors common in Europe.

US-domiciled funds such as SPUS and HLAL add to the momentum by significantly outperforming conventional benchmarks that attract interest from not just Muslim investors but also ESG-conscious investors of other faiths.

Europe: As of Q4 2025, the European market managed US$8.83 billion across 46 distinct funds, according to the IFN database, establishing itself as a sophisticated secondary hub for the asset class behind the US-led Americas. Europe’s Shariah assets grew by 55.79% in this fourth quarter, the most for any region. The growth came as European Shariah ETFs experienced a significant acceleration in late 2025, fueled by a mix of equity performance and commodity surges.

With 46 funds, Europe hosts the highest number of individual Shariah ETF products globally, nearly four times the count found in the Americas. The region leverages the UCITS framework, which provides a globally recognized regulatory seal for cross-border distribution. This allows European asset managers to efficiently reach millions of diverse investors not just within the EU, but also across international markets in Asia and Latin America.

Africa: With a young, tech-savvy demographic and a growing middle class seeking ethical investment avenues, Africa is emerging as a dynamic frontier for the Shariah ETF market. With an AuM of US$2.86 billion spread across six funds, the African Shariah ETF space is much smaller than the asset volumes seen in the Americas or Europe.

The continent, however, is witnessing significant structural maturation, particularly in South Africa and Nigeria. In 2025, gold-linked Shariah ETFs provided a critical hedge against local currency volatility, helping deliver a 5.46% AuM growth in Q4 2025.

Middle East: The only region to post a -8.37% AuM decline in Q4 2025, Middle East Shariah ETF funds still finished 2025 with an AuM of US$1.91 billion. Saudi Arabia dominated regional activity, holding US$1.67 billion of the Middle East market for Shariah ETFs, with growth underpinned by the Kingdom’s Vision 2030 reforms.

The Saudi market aside, the Chimera S&P Kuwait Shariah ETF provided a critical single access point to Kuwaiti equities in 2025, with heavy weighting toward financials and real estate.

Asia Pacific: While the world’s smallest hub for Shariah compliant ETFs, Asia Pacific is still defined by a highly mature retail ecosystem and a rapid pivot toward digital distribution. As of Q4 2025, the region maintained a sector AuM of US$361.95 million in assets across 18 funds.

Malaysia is the region’s leader, with US$238.28 million in six funds. Shariah ETF funds in Asia Pacific saw a 17.81% increase in assets during Q4, emerging as a "safe harbor" for investors amid global geopolitical tensions.

Table 1: Shariah ETF funds growth quarter-on-quarter

Chart 1: Shariah ETF funds by region, AuM and fund count

Table 2: Shariah ETF funds by domicile and fund count

Largest capitalized Shariah ETF funds

State Street Global Advisors' SPDR Gold Shares ETF remains the foundational pillar of the Shariah ETF universe, functioning as the world’s largest and most liquid gold-backed investment vehicle. As of Q4 2025, SPDR’s AuM stood at US$172,747 million. It follows a period of exceptional momentum for the ETF, which soared 64% in 2025 and has already gained roughly 18% in the first quarter of 2026.

While not originally designed as a religious product, the SPDR became a cornerstone of Islamic finance following a landmark certification in February 2017. For a gold investment to be Shariah compliant, it must be backed by physical gold and traded on a "spot" basis. SPDR fulfills this by holding 100% physical gold bullion in secure vaults, primarily overseen by custodians HSBC and JPMorganChase.

Table 3: Largest capitalized Shariah ETF funds

Top performing Shariah ETF funds

QNB Finans Portfoy’s Silver Participation Exchange Traded Fund was the top performer among global Shariah ETFs in Q4 2025, returning just over 80%. A physically-backed vehicle that has become a major liquidity point for silver exposure in the Mediterranean and Middle Eastern corridors, the fund oversaw US$1.27 billion in AuM as of February 2026. It remains the dominant silver-focused ETF listed on Borsa Istanbul.

Table 4: Top performing Shariah ETF funds

Outlook

The global Shariah compliant ETF sector is poised for continued growth as demand for ethical, value-based investment vehicles intensifies across international markets. The expansion is driven by a shift from traditional mutual funds toward ETFs, favored for their tax efficiency, lower costs and enhanced transparency.

Market performance is expected to remain robust, particularly as Shariah benchmarks continue to outperform conventional indices through heavy weightings in high-growth sectors like healthcare and technology. The ongoing integration of ESG criteria is projected to further benefit the asset class, attracting a diverse range of institutional and retail investors seeking sustainable financial options.

Regional growth will likely be led by the Americas and Europe, which together command the vast majority of global assets and benefit from established regulatory frameworks like UCITS.

Finally, technological innovation and the rise of digital distribution platforms are expected to democratize access, allowing a younger, tech-savvy demographic to participate in global Shariah markets.