Is UMMA halal?

UMMA tracks the Dow Jones Islamic Market International Titans 100 Index, which selects roughly the 100 largest companies domiciled outside the United States that pass Shariah screening, weighted by float-adjusted market capitalization. In practice this produces a portfolio dominated by a handful of sectors rather than a broad slice of the global economy. Semiconductor and electronics manufacturers out of South Korea, Taiwan, Japan, and Germany, Samsung Electronics, SK hynix, Taiwan Semiconductor Manufacturing, ASML, Infineon Technologies, Murata Manufacturing, Tokyo Electron, make up the largest single block of the fund. European pharmaceutical names like AstraZeneca and Roche and software firm Constellation Software round out the top ten. There is essentially no US exposure by design, and relatively little exposure to consumer staples, financials, or utilities compared to a conventional international index fund, because Shariah screening removes most of the financial sector and many industrial and consumer names carry disqualifying debt or interest-bearing cash. Investors should think of UMMA as a concentrated bet on non-US technology hardware and pharmaceuticals rather than a diversified international equity sleeve.

UMMA applies the Dow Jones Islamic Market methodology, which predates AAOIFI's 1999 standardization but has since converged closely with it. The business-activity screen removes companies with material revenue from conventional banking and insurance, alcohol, tobacco, pork, gambling, adult entertainment, and weapons. The financial-ratio screen caps total debt, cash plus interest-bearing securities, and accounts receivable each at 33% of trailing 24-month average market capitalization, a slightly different averaging window than the AAOIFI standard but built on the same underlying logic of limiting a company's reliance on interest-based leverage and holdings. Wahed contracts Yasaar Limited, an independent Shariah advisory firm, to certify the index construction and review changes as companies are added or removed. Because the fund is structured as an actively managed ETF rather than a pure index tracker, Wahed has some latitude in security selection versus the underlying index, though in practice UMMA's holdings closely mirror the Titans 100 composition. Investors who want to verify an individual constituent independently can cross-check it against Zoya or Musaffa.

At 0.65%, UMMA is the most expensive fund in this comparison, roughly 15 to 35 basis points above SPUS, HLAL, and the other domestic halal ETFs. Part of that premium reflects the smaller asset base international Shariah funds carry (UMMA holds under $300 million versus SPUS's billions), which means less economy of scale to spread fixed fund costs across. Part of it also reflects the active-adjacent management structure Wahed uses. The trailing dividend yield sits around 0.9% to 1.0%, modest but not unusual for a fund concentrated in technology hardware manufacturers that typically reinvest cash into capital expenditure rather than paying large dividends. Since its 2022 launch, UMMA's performance has tracked the fortunes of the global semiconductor cycle closely, meaning periods of strong AI-driven demand for chips have lifted the fund, while downturns in that cycle have hit it harder than a more diversified international fund would be hit.

UMMA is best suited to investors who already hold US Shariah equity exposure through a fund like SPUS or HLAL and want geographic diversification without researching the compliance profile of 100 individual foreign companies themselves. It is a reasonable single-ticker way to add non-US developed and emerging market exposure to a halal portfolio. It is less suited to investors seeking broad, low-cost international diversification comparable to a conventional total international index fund, since UMMA's sector concentration in semiconductors and its 0.65% expense ratio work against that goal. Investors should also weigh the currency and geopolitical concentration risk that comes with heavy Taiwan and South Korea exposure, both regions carrying cross-strait and regional tensions that do not show up in a standard fact sheet but matter to long-term holders.

Wahed publishes a per-share dividend purification figure for UMMA on its website (wahed.com/umma) each quarter, calculated by its outside Shariah advisor, Yasaar Limited, and posted alongside the fund's quarterly distributions. Because every UMMA holding individually passes Dow Jones Islamic Market screening, the companies in the portfolio are not fundamentally impermissible, but most still generate a small sliver of income from interest on cash reserves or from a minor amount of non-compliant activity that falls under the standard tolerance threshold. That sliver, commonly between 0.5% and 5% of each company's dividend, has to be identified and donated to charity rather than kept or reinvested, since accepting it as clean income would not be consistent with the Shariah screening the fund otherwise applies. Yasaar Limited aggregates the purification ratio across all of UMMA's roughly 98 holdings, weighted by portfolio composition, and Wahed publishes the resulting per-share number investors can apply to their own dividend receipts. Investors holding UMMA in a taxable account should check wahed.com each quarter rather than assuming a prior quarter's purification figure still applies, since portfolio weights and underlying companies' interest income shift as the index rebalances.