Halal ETFs on the UK Market: ISWD vs HLAL vs HSBC Islamic Compared by Fee and Holdings
For most UK Muslim investors the practical halal-ETF choice comes down to three funds: the iShares MSCI World Islamic UCITS ETF (ticker ISWD, ISIN IE00B27YCN58, 0.30% TER), the Wahed FTSE USA Shariah ETF (HLAL, 0.50%), and the HSBC Islamic Global Equity Index Fund — an OEIC-style index fund rather than an exchange-traded fund. They differ on cost, on geography, and crucially on which Shariah screen they use. Below I compare all three on fee and holdings, show a worked 10-year cost example on £10,000, and explain what the MSCI versus FTSE Shariah methodologies actually exclude.
The three funds at a glance
Only one of these — ISWD — is a low-cost, globally diversified halal ETF you can hold in almost any UK Stocks & Shares ISA or SIPP. HLAL is a US-listed ETF that is harder (and sometimes impossible) for a retail UK investor to buy directly. The HSBC fund is not an ETF at all; it is an open-ended index fund (the UK retail vehicle is structured as an OEIC/CCF), which behaves like an ETF for the saver but trades once a day at a single price rather than continuously.
| Fund | Ticker / structure | Index & screen | Ongoing cost | Geography |
|---|---|---|---|---|
| iShares MSCI World Islamic UCITS ETF | ISWD (GBP) / ISDW (USD); UCITS ETF, Ireland-domiciled | MSCI World Islamic Index (MSCI screen) | 0.30% TER | ~23 developed markets, heavy US weight |
| Wahed FTSE USA Shariah ETF | HLAL; US-listed ETF (Nasdaq) | FTSE USA Shariah Index (FTSE/AAOIFI screen) | 0.50% TER | US large & mid cap only |
| HSBC Islamic Global Equity Index Fund | OEIC / CCF index fund (not an ETF) | Dow Jones Islamic Market Titans 100 (Dow Jones screen) | ~0.62%–0.97% OCF (share-class dependent) | ~100 largest global Shariah-screened firms |
Costs verified June 2026 against the iShares/BlackRock and justETF factsheet pages (ISWD), multiple ETF data providers (HLAL) and Hargreaves Lansdown fund pages (HSBC). The HSBC figure depends on which share class your platform offers — see below.
1. iShares MSCI World Islamic UCITS ETF (ISWD / ISDW) — the default core holding
ISWD is the fund most UK halal investors end up holding, and for good reason. It is a UCITS exchange-traded fund domiciled in Ireland, which means it sits comfortably inside a UK Stocks & Shares ISA or SIPP and is widely available on UK platforms. The London-listed GBP line trades under ISWD; the USD line is ISDW. Both share the same fund and ISIN, IE00B27YCN58.
- TER: 0.30% per year — confirmed on the BlackRock/iShares and justETF factsheets. That is roughly £30 a year on a £10,000 holding, taken out of the fund's value rather than billed to you.
- Index: MSCI World Islamic Index — large and mid-cap stocks across developed markets that pass MSCI's Shariah business-activity and financial-ratio screens. The index has launched in December 2007 and the ETF has run since then, so it has a long, real track record.
- Distribution: the headline USD line is distributing (it pays you dividends), so you receive income you may need to purify a small portion of (see the screening section).
- Diversification: exposure across the developed world, though like any cap-weighted global fund it leans heavily toward US technology names because those dominate the index after screening.
The one honest weakness: because Shariah screening removes most banks, insurers and highly-leveraged companies, ISWD is more concentrated in technology and healthcare than a conventional MSCI World tracker. That is a feature of every halal global fund, not a fault of iShares specifically.
2. Wahed FTSE USA Shariah ETF (HLAL) — and the UK access problem
HLAL is run by Wahed and tracks the FTSE USA Shariah Index — large and mid-cap US companies that pass FTSE's AAOIFI-aligned screen. Its expense ratio is 0.50%, and it has traded on Nasdaq since July 2019.
Here is the catch UK investors run into. HLAL is a US-domiciled ETF, not a UCITS fund. Under the UK's PRIIPs rules, US-listed ETFs generally do not publish a UK/EU-style Key Information Document, so most mainstream UK retail brokers will not let you buy them in an ISA or general account. In practice you typically access US-style Shariah exposure as a UK investor in one of these ways:
- Through the Wahed Invest UK app/platform, which builds Shariah portfolios for UK clients (including ISA wrappers) — rather than buying the US-listed HLAL ticker yourself on a DIY broker.
- Via a UCITS equivalent — if you specifically want screened US exposure in a self-select ISA, a UCITS-domiciled Shariah fund (such as a global Islamic ETF like ISWD, which already carries a large US weight) is the practically available route.
- Professional / elective-professional clients may have direct US-ETF access, but that is the exception, not the retail norm.
3. HSBC Islamic Global Equity Index Fund — the OEIC alternative to an ETF
The HSBC Islamic Global Equity Index Fund is not an ETF; it is a passively managed open-ended index fund (the UK retail wrapper is OEIC/CCF-style). For a saver it does much the same job as a halal ETF — it just prices once a day at a single net asset value rather than trading live on an exchange. That makes it a clean fit for monthly-contribution ISA investing where intraday price doesn't matter.
- Index: Dow Jones Islamic Market Titans 100 — the ~100 largest Shariah-screened companies globally. It launched in 2000, so it is one of the longest-running halal funds available to UK savers.
- Cost: share-class dependent. On Hargreaves Lansdown the cheaper "BC" accumulation class shows an ongoing charge (OCF) of 0.62%, while the older "AC" class shows 0.97%. Always check which class your platform actually offers — paying 0.97% when 0.62% exists on the same fund is a needless drag.
- Concentration: at roughly 100 holdings it is more concentrated than ISWD's broader developed-market index, with around 80% US weight on recent factsheets.
The HSBC fund's appeal is familiarity and the OEIC structure (simple monthly investing, no bid/ask spread to think about). Its drawback is cost: even the cheaper class at 0.62% is roughly double ISWD's 0.30%.
Worked example: what 0.30% vs 0.50% costs over 10 years on £10,000
Aisha, 32, in Birmingham, has £10,000 to invest for the long term inside her Stocks & Shares ISA. She is choosing between a 0.30% halal ETF (ISWD) and a 0.50% one (the cost difference she'd face if she paid HLAL-style charges). She makes no further contributions and we hold the gross return identical so we are comparing fees only. We assume a 6% gross annual return, which is illustrative, not a promise.
Step 1 — net return after fees.
- Fund A (0.30% TER): net return ≈ 6.00% − 0.30% = 5.70% per year
- Fund B (0.50% TER): net return ≈ 6.00% − 0.50% = 5.50% per year
Step 2 — grow £10,000 for 10 years.
- Fund A: £10,000 × (1.0570)10 = £10,000 × 1.7411 ≈ £17,411
- Fund B: £10,000 × (1.0550)10 = £10,000 × 1.7081 ≈ £17,081
Step 3 — the fee gap. The 0.20-percentage-point difference in TER costs Aisha about £330 over 10 years on a single £10,000 lump sum — roughly £17,411 − £17,081. As a sense-check, a rough "fee × value × years" estimate gives 0.20% × ~£13,500 average balance × 10 ≈ £270–£330, which lines up.
Why it matters at scale: on a £100,000 ISA the same 0.20% gap is about £3,300 over a decade, and on regular monthly contributions over 30 years the compounding makes the gap far larger. The cheaper fund wins automatically if it gives you the exposure you actually want.
Method note: this is a simplified flat-fee illustration. Real TERs are deducted daily from NAV and real returns vary year to year, so treat the £330 as the order of magnitude, not a precise forecast. Past performance is not a guide to the future.
| Year | Fund A @ 0.30% (5.70% net) | Fund B @ 0.50% (5.50% net) | Cumulative fee gap |
|---|---|---|---|
| Start | £10,000 | £10,000 | £0 |
| Year 5 | ≈ £13,194 | ≈ £13,070 | ≈ £124 |
| Year 10 | ≈ £17,411 | ≈ £17,081 | ≈ £330 |
The screens are different: MSCI vs FTSE Shariah vs Dow Jones Islamic
This is the part too many comparisons skip. All three funds remove the obviously haram — alcohol, tobacco, conventional weapons, pork, gambling, adult entertainment, and conventional interest-based finance — but they use different index providers, and the financial-ratio screens differ in the detail.
MSCI World Islamic (used by ISWD)
MSCI applies a business-activity screen plus three financial-ratio screens, all measured against total assets, with a uniform 33.33% cap on each:
- Total debt ÷ total assets < 33.33%
- (Cash + interest-bearing securities) ÷ total assets < 33.33%
- (Accounts receivable + cash) ÷ total assets < 33.33%
MSCI also builds dividend purification into its total-return calculation (stripping out the small slice of income that came from non-compliant activities), and the methodology is approved by an independent Shariah advisory committee. Source: MSCI Islamic Index Series methodology.
FTSE USA Shariah (used by HLAL)
FTSE's Shariah series is screened by Yasaar Limited against AAOIFI standards. The key thresholds, measured against total assets (gross assets), are:
- Total debt ÷ total assets < 33%
- (Cash + interest-bearing items) ÷ total assets < 33%
- (Accounts receivable + cash) ÷ total assets < 50%
- Non-compliant (e.g. interest) income ≤ 5% of total revenue
Note the receivables threshold (50%) differs from MSCI's (33.33%), and FTSE applies an explicit ≤5% impure-income limit. Source: FTSE Shariah Indexes methodology (FTSE Russell).
Dow Jones Islamic Market Titans 100 (used by the HSBC fund)
The HSBC fund tracks a Dow Jones Islamic screen, which is also AAOIFI-style but historically measures some ratios against a trailing market-capitalisation denominator rather than total assets. The practical effect: the same company can pass one provider's screen and fail another's in a borderline year, which is exactly why two "halal" global funds never hold identical lists.
Where you actually hold these: the ISA wrapper
For a UK investor, the wrapper usually matters more than the 0.20% fee difference. Holding any of these funds inside a Stocks & Shares ISA means your dividends and capital growth are free of UK income tax and capital gains tax. The ISA allowance is £20,000 for the 2026/27 tax year, and you can spread it across cash ISAs, Stocks & Shares ISAs, innovative finance ISAs and Lifetime ISAs. Sources: gov.uk — Individual Savings Accounts and gov.uk — How ISAs work.
- ISWD (0.30% TER) is the practical default core holding for UK halal investors: cheapest, broadest, UCITS, and easy to hold in an ISA or SIPP.
- HLAL (0.50%) is a US-listed ETF most UK retail brokers won't let you buy directly — you typically get its US Shariah exposure via the Wahed UK platform or a UCITS equivalent instead.
- The HSBC Islamic fund is an OEIC index fund (not an ETF) tracking the Dow Jones Islamic Titans 100; pick the cheaper share class (≈0.62%) if your platform offers it rather than the ≈0.97% one.
- On £10,000 over 10 years, a 0.30% vs 0.50% fee gap costs roughly £330 — small on a lump sum, but it compounds hard on larger balances and monthly contributions.
- MSCI, FTSE/AAOIFI and Dow Jones screens differ in the financial-ratio detail, so two halal funds will never hold identical stocks — all are scholar-overseen; you still handle dividend purification.
- Hold whichever you choose inside a Stocks & Shares ISA (£20,000 allowance for 2026/27) to keep growth and dividends UK-tax-free.
Frequently asked questions
What is the best halal ETF for UK investors?
For most UK investors the iShares MSCI World Islamic UCITS ETF (ISWD, 0.30% TER) is the most practical single halal ETF: it is the cheapest of the mainstream options, globally diversified across developed markets, UCITS-structured so it sits in an ISA or SIPP, and widely available on UK platforms. "Best" still depends on your goals — confirm the current factsheet and speak to an adviser.
Can I buy the Wahed HLAL ETF in the UK?
Usually not directly. HLAL is a US-domiciled ETF, and most UK retail brokers block US-listed ETFs because they don't publish a UK/EU Key Information Document (KID) under PRIIPs rules. UK investors typically access US-style Shariah exposure through the Wahed Invest UK platform (including ISA wrappers) or via a UCITS fund such as a global Islamic ETF instead.
Is the HSBC Islamic Global Equity Index Fund an ETF?
No. It is an open-ended index fund (OEIC/CCF-style), not an exchange-traded fund. It prices once a day at a single NAV rather than trading live on an exchange, but for a long-term saver it does much the same job. It tracks the Dow Jones Islamic Market Titans 100 and its ongoing charge is share-class dependent — roughly 0.62% on the cheaper class and 0.97% on the older one.
How much does the 0.30% vs 0.50% fee difference actually cost me?
On a single £10,000 investment held 10 years at a 6% gross return, a 0.30% fund grows to about £17,411 and a 0.50% fund to about £17,081 — a gap of roughly £330. The gap scales with balance and time: on £100,000 it's about £3,300 over a decade, and with monthly contributions over 30 years it is much larger. Figures are illustrative; real returns vary.
Do MSCI and FTSE Shariah screens exclude the same companies?
No, not exactly. Both remove alcohol, tobacco, gambling, conventional finance and other haram activities, and both use financial-ratio screens measured against total assets. But the thresholds differ — for example MSCI caps receivables + cash at 33.33% of total assets while FTSE/AAOIFI uses 50%, and FTSE applies an explicit ≤5% impure-income limit. The result is that two halal global funds will hold overlapping but not identical stock lists.
Do I still need to purify dividends if I hold a halal ETF?
Possibly, yes. Even Shariah-screened companies can earn a small slice of impure income (e.g. incidental interest on cash). Some index methodologies build dividend purification into the index return; where the fund does not cleanse it for you, the scholarly view is that you should estimate the impure portion of your dividends and give it to charity as cleansing, without claiming it as a tax-deductible donation. Check the fund's documentation and ask a qualified scholar.
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