Islamic Sharia Stocks are stocks that comply with sharia principles in Islam, such as the prohibition of usury, maysir, and gharar.

Companies whose stocks are considered sharia must operate in a halal business sector, such as not being involved in alcohol, gambling, or usurious products. In Indonesia, sharia stocks are curated in special indexes, such as the Jakarta Islamic Index (JII).

These stocks offer profit opportunities like conventional stocks, but with a focus on compliance with Islamic teachings, making them suitable for investors who want to invest in a halal manner.

Also Read: 8 Differences Between Nasdaq and NYSE: Choose Smartly, Get Profits!

 

What are Islamic Sharia Stocks?

As explained earlier, Islamic Sharia stocks are stocks that follow the principles of sharia in Islam, such as the prohibition of usury (interest), maysir (gambling), and gharar (uncertainty).

Companies that are considered sharia must run a halal business, and not be involved in prohibited activities, such as alcohol, gambling, or usury.

The goal of sharia investment for Muslim investors, both in the US and around the world, is to gain halal financial benefits, while still adhering to religious teachings.

Sharia investment allows investors to participate in the global capital market without violating Islamic principles, thus providing a balance between worldly and spiritual benefits.

 

What is Halal in Investment?

It should be noted that in the perspective of Sharia law, “halal” means anything that is permitted or allowed according to Islamic teachings.

In the context of investment, halal means that the investment is free from elements that are prohibited in Islam, such as usury (interest), maysir (gambling), gharar (excessive uncertainty), and haram business activities such as alcohol, gambling, or products containing pork.

The relationship between the concept of halal and investing in the stock market is that a Muslim may only invest in stocks of companies whose activities and finances are in accordance with Sharia law.

That means, the company is not involved in haram business and does not conduct financial transactions that violate sharia principles, such as earning income from interest.

By investing in a halal manner, a Muslim investor ensures that the profits earned remain within the limits permitted by religious teachings.

Also Read: Nvidia Investment: Technology Stocks with Bright Prospects & Profits

 

Shariah Equity Screening Methodology

Islamicly, together with its internal Shariah Advisory Board, has formulated Shariah screening criteria that are recognized by most Shariah Scholars and Islamic index providers.

These criteria are in line with AAOIFI standards and expand upon existing guidelines. The screening includes the following three levels.

1. Business Sector Screening

Companies must conduct their business in accordance with Shariah principles as interpreted by the Shariah Advisor. Companies involved in the following activities will be excluded from the investment list:

• Alcohol
• Financial Services
• Gambling
• Pork Products
• Pornography
• Tobacco
• Advertising
• Media & Entertainment
• Cash trading of gold and silver with deferral

However, companies that derive less than 5% of their revenue from such activities (excluding non-operational interest) are still considered to meet the business sector screening requirements.

2. Financial Ratio Screening

Once the business sectors are screened, the remaining companies will be evaluated based on certain financial ratios. This review is important because certain financial ratios may not be in accordance with Shariah principles.

The three main aspects that are reviewed are leverage, cash, and the proportion of income derived from non-compliant activities. This evaluation is carried out periodically.

Also Read: Top 7 American Blue Chip Stocks with the Largest Dividends

3. Dividend & Income Purification

If a company passes the sector screening but has less than 5% of its income derived from prohibited activities, then the portion of dividends or income related to such activities must be “purified.”

This purification process involves removing income from sources that are not in accordance with Shariah principles.

When a Shariah-compliant company receives dividends or other income from non-halal sources, the amount must be channeled to charity to purify the income in accordance with Shariah provisions.

 

List of Top Companies in the US Based on Sharia Compliance

The list of top companies in the US that have met the criteria for Sharia compliance are known to have gone through a strict screening process to ensure that their business activities and financial ratios are in line with Sharia principles. Here is the list.

1. Largest Halal Companies

The largest halal companies are companies that have met Sharia compliance standards, both in terms of business activities and financial ratios.

Although some giant technology companies such as Apple, Microsoft, and NVIDIA do not operate in sectors that are clearly haram, they still have to go through strict screening to ensure that their income does not involve prohibited activities, such as usury or transactions that are not in accordance with Sharia principles.

Quoting blog-islamicly-com,, here is a table of the list of top companies in the US based on Sharia compliance.

Market Capitalization Company.	Market Capitalization	Compliance	Compliance Risk Factors
Apple Inc	$3.38 T	Halal	Low (Impossible to Be Non-Compliant)
Microsoft Corp	$3.20 T	Halal	Low (Impossible to Be Non-Compliant)
NVIDIA Corp	$2.92 T	Halal	Low (Impossible to Be Non-Compliant)
Alphabet Inc	$1.94 T	Halal	Low (Impossible to Be Non-Compliant)
Amazon.com, Inc.	$1.96 T	Halal	Low (Impossible to Be Non-Compliant)
Meta Platforms Inc	$1.33 T	Halal	Low (Impossible to Be Non-Compliant)
Berkshire Hathaway Inc	$965.9 B	Not Halal	Low (Impossible to Be Non-Compliant)
Eli Lilly and Co	$877.9 B	Halal	Low (Impossible to Be Non-Compliant)
Tesla Inc	$721.6 B	Halal	Low (Impossible to Be Non-Compliant)
UnitedHealth Group Inc	$548.8 B	Not Halal	Low (Impossible to Be Non-Compliant))

 

How Many Halal Stocks Are There in the United States?

Many Muslim investors in the US may be unsure whether stocks listed on the US Stock Exchange are Shariah-compliant.

However, many companies listed in the US run halal businesses and have been classified as Shariah-compliant.

Interestingly, around 51.39% of the total stocks listed in the US meet the Shariah criteria, as shown in the graph below.

Source: blog-islamicly-com

Sharia-Compliant Stocks in the US by Sector

The following is an analysis of Shariah-compliant stocks in the United States by sector, which provides insight for Muslim investors to choose stocks that are in line with religious values ??and make more strategic investment decisions.

Quoting the blog-islamicly-com page, the following is a table listing sharia-compliant stocks in the US by sector.

 

Sectors	Compliant	Non-Compliant	Overall Total
Advertising	2	0	2
Aerospace and Defense	0	0	0
Clothing/Accessories	3	0	3
Equipment and Tools	0	0	0
Car & Truck Parts	1	1	2
Basic material	370	203	573
Drinks (Non-alcoholic)	0	0	0
Biotechnology & Pharmaceuticals	10	8	18
Business Services	5	5	10
Capital Goods	274	176	450
Chemical Manufacturing	1	2	3
Communication Equipment	4	1	5
Communication Services	2	0	2
Computer Hardware	1	1	2
Computer network	0	1	1
Conglomerate	1	2	3
Construction Raw Materials	0	1	1
Construction Services	0	2	2
Cycle Consumers	190	134	324
Consumer Financial Services	0	2	2
Consumer/Non-Cyclical	138	179	317
Containers & Packaging	1	1	2
Plant	0	1	1
Electrical Services	5	4	9
Electronic Instruments & Controls	2	1	3
Energy	136	182	318
Finance	395	1046	1441
Food Processing	1	2	3
Forestry and Wood Products	0	1	1
Furniture and Equipment	3	0	3
Gold & Silver	3	0	3
Health	1049	494	1543
Health Facilities	8	4	12
Insurance (Jiwasraya)	0	1	1
Insurance (Other)	0	2	2
Insurance (Property and Casualty)	0	1	1
Investment Services	5	11	16
Steel	2	1	3
Total	2612	2470	5082

(Data per 13 September 2024)

 

1. Sectors with High Compliance

Examples of sectors with high compliance, such as biotechnology, health, and energy.
Number of halal stocks in each sector.

From the table above, several sectors with high compliance with Sharia principles include:

Biotechnology and Pharmaceuticals: There are 10 halal stocks out of a total of 18 stocks.
Health Services: Has 1,049 halal stocks out of a total of 1,543 stocks.
Energy: There are 136 halal stocks out of a total of 318 stocks.

These sectors are recognized for not being involved in prohibited activities, such as usury or gambling, and focus on innovation and services that benefit the community.

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2. Sectors with Low Compliance

Meanwhile, still from the table above, several sectors that are less compliant with Sharia include:

Financial Sector: Only 395 out of 1,441 stocks are considered halal. Many companies in this sector are involved in usury practices.
Insurance Sector: With all insurance categories (life, property, etc.) having low compliance as most insurance business models involve elements of uncertainty and usury.

These sectors are often non-Shariah compliant as the activities undertaken are contrary to Islamic principles, such as interest and excessive risk.

 

Sharia-Compliant Investment Options in the United States

As an investor who cares about Sharia compliance, you have a variety of options to invest in the United States in a compliant manner. Here are some investment options that meet Sharia criteria.

1. Sharia Equity Stocks

It is important to note that Sharia equity stocks are a Sharia-compliant investment option in the US.

Muslim investors can choose compliant stocks by checking whether the company is involved in halal business and ensuring that income from haram activities does not exceed the set limit of less than 5%.

In addition, the use of Sharia stock indexes can help investors identify compliant companies.

Also Read: Dissecting 8 Types of Stocks: Which One is Right for You?

2. Sharia Mutual Funds

Sharia mutual funds are investment products managed by investment managers and are in accordance with Sharia principles.

How it works involves pooling funds from various investors to be invested in a portfolio of stocks or financial instruments that meet Sharia criteria.

Examples of these mutual funds include Falah Capital Iman Fund and Iman Fund, which are specifically designed for investors seeking compliance with Islamic law.

3. ETFs and Islamic Sukuk

Exchange-Traded Funds (ETFs) and Islamic Sukuk are investment options available to investors in the US. Islamic ETFs, such as the Wahed FTSE USA Syariah ETF, offer diversification by investing in securities that are compliant with Islamic principles.

Islamic Sukuk are debt instruments that are also compliant with Islamic principles, providing an alternative for investors seeking steady income without violating Islamic principles.

Conclusion: The Importance of Choosing Islamic-Compliant Stocks

So, that was an interesting discussion about the Top 10 Islamic Stocks in the US: The Best Halal Investment Options that you can read more about in the crypto Academy at INDODAX Academy.

In conclusion, choosing Islamic-compliant stocks is very important for Muslim investors because it ensures that their investments are in line with religious teachings.

By investing in Sharia-compliant financial instruments, investors not only maintain their spiritual integrity but also contribute to ethical and responsible business practices.

The positive impacts of investing in Sharia-compliant stocks include supporting companies that operate within halal boundaries, helping sustainable economic growth, and providing the potential for halal profits.

In addition, Sharia investment has the potential to create wider awareness and acceptance of ethical financial practices in society.

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FAQ

1.What are Sharia Stocks?

Stocks that meet Sharia principles and are permitted by Islamic law.

 

2.How to Screen Sharia Stocks?

Screening is carried out by Sharia scholars through the Sharia screening criteria method.

 

3.Are There Any Major Companies in the US That Comply with Sharia?

Yes, companies like Apple, Microsoft, and NVIDIA are considered Sharia compliant.

 

4.What are the Sharia Investment Options in the US?

Sharia Stocks, Sharia Mutual Funds, Sharia ETFs, and Sharia Sukuk.