You own VOO. You know it's not halal. But switching feels risky — will you sacrifice returns? Is the halal alternative actually comparable? Let's compare VOO (Vanguard S&P 500) and SPUS (SP Funds S&P 500 Sharia) with real data.
Head-to-Head Comparison
| Metric | VOO | SPUS |
|---|---|---|
| Index | S&P 500 | S&P 500 Shariah |
| Holdings | 503 | ~235 |
| Shariah Compliance | 67% (NOT compliant) | 100% compliant |
| Expense Ratio | 0.03% | 0.49% |
| AUM | $430B | $1.1B |
| 1-Year Return | +24.1% | +27.3% |
| 3-Year Annualized | +10.8% | +12.1% |
| 5-Year Annualized | +13.5% | +15.2% |
| Purification Required | N/A (not halal) | ~1.2% |
| Dividend Yield | ~1.3% | ~0.9% |
The Performance Surprise
SPUS has outperformed VOO over 1, 3, and 5-year periods. This isn't an anomaly — it's structural. When you remove banks, insurance companies, and tobacco/alcohol stocks from the S&P 500, you're left with a portfolio that's:
- Tech-heavy (~45%) — technology has been the best-performing sector
- Low-debt — Shariah screening is a quality filter that selects for financially conservative companies
- No financial drag — banks have underperformed since 2008
For a deep dive into the performance data, see our S&P 500 Shariah vs Conventional performance analysis.
The Cost Gap
The elephant in the room: VOO charges 0.03% vs SPUS at 0.49%. That's a 0.46% annual cost difference. On a $100,000 portfolio, that's $460/year more for SPUS.
However, SPUS has outperformed VOO by 1.3-1.7% annually — more than enough to offset the higher expense ratio. You're paying 0.46% more but earning 1.3%+ more. Net positive.
What You Lose (and Gain) by Switching
| You Lose | You Gain |
|---|---|
| Banks (JPM, BAC, WFC, GS) | Full Shariah compliance |
| Insurance (BRK.B, TRV) | Higher historical returns |
| Tobacco/Alcohol (PM, STZ) | Peace of mind |
| Lower expense ratio | Lower-debt quality portfolio |
| Higher dividend yield | No purification needed (already 100% clean) |
How to Switch
- Tax consideration: If VOO is in a taxable account, selling triggers capital gains tax. Consider switching in a tax-advantaged account (IRA, 401k) first.
- Sell VOO, buy SPUS — both are available at all major brokerages
- Set up automatic investing in SPUS just like you would with VOO
- Track purification: SPUS's ~1.2% purification rate means donating $12 per $1,000 of dividends to charity
Two ways to screen
Halal Terminal
Screen any ETF holding-by-holding and compare side-by-side with the Halal Terminal.
Key Takeaways
- SPUS has outperformed VOO over all major time periods — switching doesn't sacrifice returns
- SPUS costs 0.46% more but earns 1.3%+ more — net positive
- You lose banks and tobacco — sectors that have underperformed anyway
- Switch in tax-advantaged accounts first to avoid capital gains
- SPUS is 100% Shariah-compliant vs VOO's 67%