Wahed Launches First Sharia-Compliant UCITS ETFs in Europe

Wahed, a fintech company specializing in ethical investments, has launched its first UCITS ETFs, bringing Sharia-filtered equity exposures to the European market.

The Wahed Dow Jones Islamic World UCITS ETF (DJIW) and the Wahed S&P 500 Shariah UCITS ETF (SPWI) are listed on the London Stock Exchange. Both funds have a total expense ratio (TER) of 0.49%.

The ETFs were launched via Waystone’s white-label platform

Both products combine a rule-based Sharia screening with an additional internal exclusion logic developed by Wahed.

The rules-based screening excludes companies operating in prohibited business areas such as tobacco, alcohol, or weapons. Financial criteria are also applied, including the exclusion of heavily indebted companies and usury institutions, i.e., lenders offering high interest rates.

Shares with limited proceeds from non-compliant activities – generally up to 5% – may remain in the index. According to Sharia principles, these proceeds are to be “purified” through charitable donations.

Wahed’s additional, proprietary exclusion category is based on international human rights standards, including lists from the UN High Commissioner for Human Rights (OHCHR). It identifies companies against which there are credible allegations of human rights violations.

The Wahed S&P 500 Shariah UCITS ETF will have approximately 230 stocks removed from its parent index. This will leave about 270 stocks, Ibrahim Shaikh, Head of Investments at Wahed, explained to ETF Stream.

Another filter reduces the portfolio by around 20 companies, so the fund comprises approximately 250 stocks.

A key difference between the S&P 500 and its Sharia-compliant version is evident in the financial sector. Its weighting drops from 14% to around 4%, as many financial activities are not compatible with Sharia criteria.

Back in 2022, Wahed had already launched the Wahed FTSE USA Shariah ETP (HLAL) together with Leverage Shares

Currently, Wahed manages two US-listed ETFs: the $715 million Wahed FTSE USA Shariah ETF (HLAL) and the $183 million Wahed Dow Jones Islamic World ETF (UMMA).

DWS launched the Xtrackers S&P 500 Sharia UCITS ETF back in 2008, but later liquidated the fund. Today, BlackRock, HSBC Asset Management, and Invesco dominate the European market for Sharia-compliant ETFs. The largest fund in this segment is the Invesco Dow Jones Islamic Global Developed Markets UCITS ETF (IGDA), with assets under management of $1.1 billion.

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(Featured image by Oliver Hale via Unsplash)

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First published in ETF STREAM..A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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