Are Halal ETFs Worth It? Complete Fee Analysis & Performance Comparison 2025

SPUS vs HLAL vs VOO: Institutional-Grade Research with Stress Tests

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⚠️ IMPORTANT LEGAL NOTICE — Click to expand

This is educational research, NOT investment advice. This document is provided for informational purposes only. It does NOT constitute investment advice, a recommendation to buy or sell any security, or personalized financial guidance.

Halal Terminal does NOT provide investment advisory services and is NOT a registered investment advisor.

BEFORE INVESTING: (1) Consult with a qualified, licensed financial advisor (2) Review the full prospectus of any ETF mentioned (3) Assess your personal financial situation and risk tolerance (4) Verify all data independently

This analysis is current as of December 2025. Market conditions and fund performance may have changed. Past performance does NOT guarantee future results.

For complete disclaimers, see Legal Disclaimers.

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Key Takeaways

1. →SPUS +2.48% vs VOO — Outperformance driven by tech overweight + financials exclusion (regime-dependent)
2. →HLAL –0.24% drag — Smaller AUM + higher fees = $200K+ cost over 30 years
3. →16x fee premium — Halal ETFs charge 0.49-0.50% vs 0.03% for VOO
4. →Factor-driven, not skill — Alpha entirely explained by sector tilts; may reverse

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Executive Summary

The global Islamic finance industry has reached approximately USD 5.9–6.0 trillion in total assets as of 2024, with projections to reach USD 9.7 trillion by 2029. As Muslim investors increasingly seek Shariah-compliant equity exposure, Islamic exchange-traded funds (ETFs) have become the primary vehicle for passive investing. However, a critical question persists: Are the premium fees charged by halal ETFs—often 0.45–0.50%—justified by their performance?

This study analyzes the performance, fees, and tracking characteristics of leading halal ETFs (SPUS, HLAL) against conventional S&P 500 benchmarks (VOO, SPY) during 2020–2025.

Key Finding: SPUS outperformed the S&P 500 by 2.48% annually during this period, primarily due to factor tilts favorable to technology and low-leverage stocks. HLAL underperformed by 0.24% annually.

Critical Caveat: This period was characterized by exceptional technology sector outperformance and financial sector weakness—conditions that are not permanent. Future performance depends on whether these factor tilts persist.

Key Recommendations:

• →SPUS: Conditionally recommended for Shariah-conscious investors with 10+ year horizons who accept sector concentration risk (currently justified by 2.48% outperformance; requires annual review)
• →HLAL: Not recommended unless Shariah compliance is worth a $200K+ "faith tax" over 30 years
• →VOO: Optimal for return-focused investors; offset "haram" concerns through charitable giving (~0.5% of annual gains)

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Regime Dependency Disclaimer

This analysis covers 2020–2025, an exceptional period for specific investment factors. The reader should understand that conclusions rest on factor performance that may not persist indefinitely.

This period was characterized by:

• →Zero interest rates → QE-driven valuation expansion for growth stocks
• →Technology dominance → AI bubble dynamics, mega-cap concentration
• →Financial sector weakness → Banking crisis, low lending volumes
• →Rising rates → Favoring asset-light, low-leverage companies

These conditions created a perfect environment for Shariah-screened portfolios, which naturally exclude high-leverage, interest-bearing, and financial sector stocks.

The question this analysis cannot answer: Will this regime persist? Readers should update this analysis annually if:

• →Interest rates remain elevated (may favor financials)
• →Tech valuations compress (mean reversion)
• →Financial sector outperformance emerges
• →Economic cycles shift to favor value/cyclicals

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Part 1: The Global Halal ETF Market

1.1 Market Size and Growth

The Islamic finance industry has experienced remarkable growth over the past five years. According to the LSEG Islamic Finance Development Report 2025 (the most authoritative source), global Islamic finance assets reached USD 5.985 trillion at end-2024, representing a 21% year-on-year increase—significantly higher than the historical 10% CAGR projection.

This acceleration is driven by:

1. →Demographic expansion: The global Muslim population stands at approximately 1.9 billion, with particularly high concentrations in Southeast Asia, the Middle East, and increasingly in Europe
2. →Institutional adoption: Major asset managers (BlackRock, Vanguard, HSBC, UBS) now offer Islamic funds, legitimizing the sector for retail and institutional investors
3. →Government support: Saudi Arabia, UAE, Malaysia, and the UK have implemented pro-Islamic finance policies and regulatory clarity
4. →ESG convergence: Islamic finance principles (prohibition of riba/interest, gharar/speculation) overlap substantially with modern ESG investing, attracting both Muslim and non-Muslim ethical investors

Within Islamic finance, equities represent approximately 10–15% of total assets, with the remainder primarily in Islamic banking (72%), sukuk/bonds (17.2%), takaful/insurance (2.3%), and Islamic funds (5.1%). This means the addressable market for halal equity ETFs is roughly $600–900 billion globally.

1.2 The Halal ETF Landscape (2025)

As of December 2025, the halal ETF market includes several major players:

For comparison, conventional S&P 500 ETFs charge dramatically lower fees:

• →VOO (Vanguard S&P 500 ETF): 0.03%
• →SPY (SPDR S&P 500 ETF Trust): 0.0945%

This represents a 16–17x fee premium for halal ETFs—a significant cost that must be justified by either superior performance or strong faith-based alignment preferences.

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Part 2: Understanding Fee Impact Over Time

2.1 The Power of Compounding Fees

An expense ratio is an annual fee expressed as a percentage of assets under management. A 0.50% expense ratio means that $1,000 invested generates $5 in annual fees. For equity ETFs, these fees cover portfolio management, compliance monitoring, data licensing, and operational overhead.

The critical insight: fees compound. A 0.47% difference between halal and conventional ETFs appears small on an annual basis. Over 30 years, it becomes catastrophic.

2.2 Three Wealth Accumulation Scenarios

To address logical consistency, we present three explicit scenarios, each with different assumptions:

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Scenario 1: "Fees Only – No Alpha" (Assumes identical 10% returns)

If all ETFs deliver identical 10% annual returns, differences are pure fee drag:

$100,000 initial investment over 30 years @ 10% annual return:

After 5 years:
- VOO (0.03%): $161,051
- SPUS (0.49%): $157,097  (–$3,954)
- HLAL (0.50%): $156,831  (–$4,220)

After 20 years:
- VOO (0.03%): $669,090
- SPUS (0.49%): $615,284  (–$53,806)
- HLAL (0.50%): $614,161  (–$54,929)

After 30 years:
- VOO (0.03%): $1,730,720
- SPUS (0.49%): $1,526,207 (–$204,513)
- HLAL (0.50%): $1,522,031 (–$208,688)

Implication: If SPUS and HLAL deliver identical returns to VOO, fees alone justify conventional investing. The fee premium costs 12% of your terminal wealth over 30 years.

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Scenario 2: "SPUS Persistent Alpha" (SPUS outperforms by +2.48% annually)

If SPUS outperforms VOO by 2.48% annually (historical 2020–2025 average) due to factor tilts:

$100,000 over 30 years:

VOO @ 10.00% return: $1,730,720
SPUS @ 12.48% return (10% + 2.48% alpha): $2,036,000

Net advantage of SPUS: +$305,280

Implication: If SPUS alpha persists, outperformance more than justifies the fee premium.

Critical condition: Alpha is regime-dependent (see Part 3.5 Factor Analysis). If tech underperforms or financials rally, this alpha compresses or reverses.

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Scenario 3: "HLAL Underperformance" (HLAL underperforms by 0.24% annually)

If HLAL underperforms VOO by 0.24% annually due to methodology and AUM disadvantages:

$100,000 over 30 years:

VOO @ 10.00% return: $1,730,720
HLAL @ 9.76% return (10% – 0.24% drag): $1,522,031

Cost of HLAL: –$208,688 (12.1% of terminal wealth)

Implication: HLAL's fee premium (0.50%) combines with underperformance (0.24%) to create a 0.74% total drag. This is not recoverable unless HLAL methodology or AUM improves.

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2.3 Which Scenario Is Most Likely?

Most likely long-term outcome: Scenario 4. Factor premiums tend to mean-revert as capital floods into them.

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Part 3: Performance Analysis (2020–2025)

3.1 Inception-to-Date Performance

Key observations:

• →SPUS has outperformed the S&P 500 by 40% cumulatively over 6 years (150.22% vs. 110.29%)
• →HLAL has underperformed by 15% cumulatively (125.48% vs. 110.29%)
• →SPUS's Sharpe ratio (0.704) exceeds both conventional benchmarks, suggesting better risk-adjusted returns
• →HLAL's Sharpe ratio (0.634) exceeds VOO/SPY despite underperformance, indicating lower volatility but insufficient return premium

3.2 Year-by-Year Performance Breakdown

Critical observation: SPUS has outperformed VOO in 5 of 6 years, with the 2022 underperformance (–3.7%) more than offset by 2021 outperformance (+13.5%) and 2023 outperformance (+24.2%).

HLAL shows more volatility, with strong 2021–2023 performance offset by 2024 underperformance (–8.0% vs. VOO).

3.3 Risk-Adjusted Returns (Sharpe Ratio)

The Sharpe ratio measures return per unit of risk. Higher is better.

• →SPUS: 0.704 ← Best risk-adjusted returns
• →SPY: 0.620
• →VOO: 0.617
• →HLAL: 0.634

Interpretation: SPUS delivers 12.4% better risk-adjusted returns than VOO, suggesting not only higher returns but also lower downside volatility. This is unusual for a more concentrated portfolio (200 stocks vs. 500), indicating that Shariah screening may naturally exclude high-leverage, cyclical companies that amplify drawdowns.

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Part 3.5: Factor Attribution – What Drove SPUS's Outperformance?

The critical question: Did SPUS outperform because:

• →(A) Shariah screening identifies objectively better stocks? (structural advantage)
• →(B) Shariah screens happen to weight favorable factors in this specific period? (regime accident)

Evidence strongly suggests (B).

Factor 1: Technology Overweight

Magnitude:

• →SPUS: ~44% Technology sector weight
• →S&P 500: ~26% Technology sector weight
• →Overweight: ~18 percentage points

Performance impact:

• →Technology CAGR (2020–2025): ~18–22% annually
• →S&P 500 ex-Technology CAGR: ~8–10% annually
• →SPUS benefit from overweight: ~1.2–1.8% annualized outperformance

Risk: If technology underperforms (as it did in 2022, returning –32.4%), this overweight becomes a severe drag.

Factor 2: Financials Exclusion During Weak Period

Magnitude:

• →SPUS: 0% Financials sector exposure
• →S&P 500: ~13% Financials sector exposure
• →Exclusion: Full 13 percentage points

Performance impact:

• →Financials CAGR (2020–2025): ~5–7% annually
• →Technology CAGR (2020–2025): ~18–22% annually
• →SPUS benefit from avoiding weak sector: +0.2–0.5% annualized outperformance

Risk: In a financial sector rally (e.g., 2024–2025 with banking stability and higher rates), this exclusion becomes a drag.

Factor 3: Quality / Low Leverage Bias

Mechanism: Shariah screens exclude companies with debt > 30% of market capitalization. This naturally concentrates exposure in low-leverage, high-quality companies.

Performance impact (2020–2025):

• →Low-leverage companies outperformed as rates rose
• →High-leverage cyclicals underperformed
• →Contribution: +0.4–0.8% annualized

Risk: In a low-rate environment or credit-positive cycle, high-leverage companies outperform. This factor works against Shariah-screened portfolios.

Factor 4: Dividend Sacrifice (Drag)

Magnitude:

• →SPUS: 0.70% dividend yield
• →S&P 500: 1.35% dividend yield
• →Sacrifice: –0.65% annually

Performance impact:

• →In a growth environment (2020–2025), this dividend drag is overcome by capital appreciation
• →In a low-growth, income-focused environment, this becomes a material disadvantage
• →Contribution: –0.65% annualized drag

3.6 Total Factor Attribution

Adding up the factors:

Technology Overweight:       +1.2% to +1.8%
Financials Exclusion:        +0.2% to +0.5%
Quality / Low Leverage:      +0.4% to +0.8%
Dividend Sacrifice:          –0.65%
                             ─────────────
Total Expected:              +1.15% to +2.45%

Actual Observed:             +2.48%

Conclusion: Factor tilts fully explain observed outperformance.

Critical insight: SPUS's outperformance is entirely factor-driven, not evidence of superior Shariah screening skill. In a regime where these factors underperform (e.g., financials and value rally), SPUS will underperform VOO.

This is not a flaw of the analysis—it's a feature that disciplined investors understand.

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Part 4: The HLAL Underperformance Case

HLAL has underperformed the S&P 500 by 0.24% annually over 6 years, a consistent pattern that suggests structural, not temporary, disadvantages.

Root Causes of HLAL Underperformance

1. Smaller Asset Base ($721M vs. $1.3B for SPUS)

• →Smaller pools create higher rebalancing costs
• →Less negotiating power with index providers
• →Wider bid-ask spreads (6.08% for HLAL vs. 4.12% for SPUS)

2. Different Screening Methodology (FTSE vs. S&P)

• →FTSE may apply more conservative or different thresholds than S&P
• →Results in different constituent selection
• →May exclude high-growth names that S&P includes

3. Higher Zakat Obligation

• →~14.2% of HLAL holdings require zakat calculation
• →~11.7% of SPUS holdings require zakat calculation
• →Extra 0.2–0.3% annual zakat drag on after-tax returns

4. Operational Inefficiency

• →Smaller trading volumes increase execution costs
• →Tracking error of 2.4% vs. 2.1% for SPUS

What Would Change Our HLAL View?

We currently do not recommend HLAL. However, several scenarios would reverse this:

Path 1: Fee Reduction to 0.30%

• →Current: 0.50% expense ratio
• →Impact: Fee differential vs. VOO shrinks from 0.47% to 0.27%
• →Economics: $100K over 30 years: loss reduces from $209K to $100K
• →Probability: 35% over next 3 years (competition from larger players will eventually drive this)

Path 2: AUM Growth to $2B+ via Wahed Expansion

• →Current: $721M
• →Impact: Economies of scale reduce operational drag; tracking error improves
• →Expected benefit: Expense ratio could fall to 0.35%; tracking error improves to <2%
• →Timeline: 2–3 years likely if momentum continues
• →Probability: 50% (organic growth + new product lines)

Path 3: Outperformance Due to Methodology Alignment

• →Current: FTSE methodology seems more conservative than S&P
• →Alternative: If FTSE updates screening to weight high-growth names more, HLAL constituent set aligns with SPUS
• →Impact: Would enable HLAL to participate in SPUS-like outperformance
• →Probability: 25% (requires FTSE methodology revision)

Path 4: Macroeconomic Reversion to Value / Financials

• →Scenario: Financial and energy sectors rally; tech underperforms
• →Impact: HLAL's more balanced exposure could outperform
• →Probability: 40% over next 5 years (not predictable, but plausible)

Bottom line: HLAL is currently not recommended, but it is not permanently disqualified. We will revisit if any of these paths materialize.

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Part 5: Stress Test – What Breaks Our Recommendation?

Scenario: Financial Sector Rally

Hypothesis: What if financial stocks (XLF) rally 40% over the next 3 years?

Setup:

• →Financial sector currently represents ~13% of S&P 500
• →XLF (Financial ETF) CAGR 2020–2025: ~5–7%
• →Historical XLF average CAGR (2010–2020): ~8–10%
• →Current scenario: XLF returns 15% annually (catch-up rally)

Expected outcome under this scenario:

If XLF rallies +15% annually while broader market returns +12%:

VOO (13% XLF weight): +12% to +13% annualized (benefits from upside)
SPUS (0% XLF weight): +9% to +10% annualized (loses upside, concentration drag)

Fee-adjusted after 3 years:
VOO net: 12.97% annual return → $100K → $143.5K (+43.5% cumulative)
SPUS net: 9.5% annual return → $100K → $131.1K (+31.1% cumulative)

Outperformance gap: VOO beats SPUS by 12.4% cumulatively ($12,400 per $100K)

Conclusion: Our SPUS recommendation BREAKS under this scenario.

Monitoring Framework: When to Exit SPUS

We recommend quarterly monitoring of the following signals:

1. →

   Sector rotation – Track XLF vs. QQQ (tech) performance

   • →Signal to act: If XLF beats QQQ for 6+ consecutive months
   • →Action: Reduce SPUS to 50% allocation; increase VOO to 50%
2. →

   Financial sector health – Monitor banking valuations and credit metrics

   • →Signal to act: If financial sector P/E exceeds 1.2x historical average
   • →Action: Begin gradual exit from SPUS
3. →

   Tech valuations – Track QQQ valuation metrics

   • →Signal to act: If QQQ P/E exceeds 25x (significantly above 15–18x historical average)
   • →Action: Reassess concentration risk; consider reducing to 60% SPUS / 40% diversification
4. →

   Interest rate expectations – Monitor Fed communications

   • →Signal to act: If Fed signals prolonged higher-for-longer, monitor financials outperformance
   • →Action: Quarterly reassessment
5. →

   SPUS fee changes – Monitor for fee increases

   • →Signal to act: If expense ratio rises above 0.55%
   • →Action: Exit entirely; move to VOO or diversify

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Part 6: Revised Recommendations

For Shariah-Conscious Investors (10+ Year Horizon)

Primary Recommendation: SPUS

Rationale:

• →Currently outperforming VOO by 2.48% annually
• →Outperformance covers 0.49% fee premium
• →Shariah-compliant with broad institutional support and scholar approval

Conditions:

• →Assumes technology/growth sector remains favorable
• →Requires tolerance for sector concentration (44% Technology)
• →Subject to annual review

Exit Conditions (trigger reassessment):

1. →Tech sector underperforms market by 5%+ for 6+ months
2. →Financial sector consistently outperforms (watch XLF vs. QQQ)
3. →SPUS fee premium widens (fee increase)
4. →Tracking error deteriorates above 3%
5. →SPUS AUM falls below $500M

Secondary: SPSK (Sukuk ETF)

• →Allocate 20–30% to sukuk for diversification
• →Lower correlation to equity sectors
• →Provides alternative Shariah income source

Expected 30-Year Outcome (if alpha persists):

• →$100K → $2.04M (vs. $1.73M with VOO)
• →Additional wealth: +$305K

Risk: Alpha is regime-dependent. If factor tailwinds reverse, advantage disappears.

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For Return-Focused Investors

Primary Recommendation: VOO or SPY

Rationale:

• →Lowest fees (0.03% and 0.0945% respectively)
• →Highest liquidity (VOO: $656.8B AUM; SPY: $618B AUM)
• →Highest dividend yield (1.35%)
• →Broadest diversification (500 holdings)

Shariah Accommodation:

• →Donate 0.5% of annual gains to Islamic charities to offset "haram" holdings
• →Expected outcome: Superior terminal wealth (even accounting for charitable giving) vs. SPUS/HLAL

Expected 30-Year Outcome:

• →$100K → $1.73M
• →Charitable giving (~$50–100K over 30 years) offsets religious concerns while maintaining wealth advantage

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For HLAL (Clear Guidance)

Recommendation: Do Not Buy

Rationale:

• →Underperformance (–0.24% annually) + high fees (0.50%) = poor trade-off
• →Expected 30-year loss: $209K on $100K investment
• →Structural disadvantages (smaller AUM, less efficient operations) unlikely to resolve quickly

Alternative paths:

• →Use SPUS instead (same Shariah compliance, better returns)
• →Wait for: Fee reduction to <0.35%, AUM growth to >$2B, tracking error improvement
• →Or: Accept underperformance as "Shariah tax" if faith alignment is non-negotiable

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For Retirees / Income-Focused Investors

Strong Recommendation: VOO or SPY

Rationale:

• →SPUS/HLAL yield only 0.56–0.70% vs. 1.35% for VOO/SPY
• →Over 30 years, this 0.65% yield difference compounds to $60–80K in lost income
• →For income investors, dividend yield matters more than growth

If Shariah compliance required:

• →Use SPSK (sukuk ETF) for 40–50% allocation (generates income without equities)
• →Use SPUS for remaining 50–60% (Shariah equity exposure)
• →Result: 0.85–0.95% blended yield (better than SPUS alone)

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Part 7: Monitoring & Annual Review Checklist

Quarterly Monitoring (30 minutes)

• → Compare YTD returns: SPUS vs. QQQ (tech) vs. XLF (financials)
• → Track 3-month rolling average: Has XLF outperformed QQQ for 6+ weeks?
• → Monitor SPUS AUM (if below $500M, liquidate; exit due to liquidity risk)
• → Check SPUS fee notification (Morningstar, fund website)

Annual Review (1 hour)

• → Full year performance review (SPUS vs. VOO vs. market)
• → Technology sector valuation check (QQQ P/E ratio; watch for >25x)
• → Financial sector health assessment (XLF P/E, loan growth, credit spreads)
• → Fed rate expectations (impact on financial profitability)
• → Rebalance if sector drift exceeds tolerance (set target: max 45% tech allocation)
• → Update factor attribution analysis (still valid? Or regime shifting?)
• → Consider reducing SPUS if any exit signal triggered

Decision Framework

SPUS Annual Review Decision Tree:

Is XLF outperforming QQQ for 6+ months?
├─ YES → Move to 50% SPUS / 50% VOO or increase to 40% SPUS + 30% SPSK
└─ NO  → Continue 100% SPUS (if allocation is <40% of equity portfolio)

Is QQQ P/E > 25x AND XLF showing relative strength?
├─ YES → Reduce SPUS to 60%, diversify 40% to VOO/SPY
└─ NO  → Hold SPUS

Is SPUS AUM < $500M?
├─ YES → Exit entirely (liquidity risk)
└─ NO  → Continue monitoring

Has SPUS fee exceeded 0.55%?
├─ YES → Exit entirely; move to VOO (0.03%) or ISDU (0.30%)
└─ NO  → Continue monitoring

Conclusion: SPUS stays if no exit signals triggered.

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Part 8: Positioning for Different Investor Profiles

The Shariah-First Investor ("I will not invest in haram")

Allocation: 100% SPUS

Rationale:

• →No compromise on Shariah compliance
• →SPUS is the best Shariah option on risk-adjusted basis
• →Accept regime risk in exchange for faith alignment

30-year expected outcome: $2.04M (if alpha persists) or $1.52M (if alpha compresses)

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The Balanced Investor ("Shariah AND Returns Matter Equally")

Allocation: 60% SPUS + 30% SPSK (sukuk) + 10% VOO/cash

Rationale:

• →Primary: Shariah-compliant equity (SPUS)
• →Secondary: Shariah-compliant income (SPSK)
• →Diversification: Small allocation to conventional for value capture

30-year expected outcome: $1.85M (blended)

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The Return-Focused Muslim Investor ("Returns First, Shariah Second")

Allocation: 100% VOO + annual charitable giving ($2,500–5,000/year)

Rationale:

• →Maximum fee efficiency (0.03%)
• →Highest dividend yield (1.35%)
• →Broadest diversification
• →Offset "haram" concerns through charity

30-year expected outcome: $1.73M + social impact from $150K in charitable giving

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The Retiree ("Income First")

Allocation: 60% VOO/SPY (for dividend) + 40% SPSK (for yield)

Rationale:

• →VOO: 1.35% dividend yield
• →SPSK: 3–4% yield (bonds/sukuk)
• →Blended yield: ~2.1% (vs. 0.56–0.70% for SPUS/HLAL alone)

Annual income on $500K portfolio:

• →VOO/SPY allocation: $4,050/year
• →SPSK allocation: $6,000–8,000/year
• →Total: $10,050–12,050/year

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Part 9: Final Verdict – Conditional Recommendation

The Bottom Line

Are halal ETFs worth it? The answer is regime-dependent and conditional.

SPUS: Worth it if

• →You believe tech/growth will continue to lead
• →You can tolerate sector concentration
• →You're comfortable with annual monitoring
• →Your time horizon is 10+ years

HLAL: Not worth it unless

• →Shariah compliance is worth $200K+ in lost wealth over 30 years
• →You have conviction in FTSE methodology superiority
• →You're willing to wait for AUM growth and fee reductions

VOO: Worth it if

• →Returns are your primary concern
• →You're comfortable offsetting "haram" concerns through charity
• →Dividend yield matters (1.35% vs. 0.56–0.70%)

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The Essential Caveat

This recommendation is not permanent. It is conditioned on:

1. →Regime persistence (tech/growth continuing to outperform)
2. →Factor performance (low-leverage, quality continuing to be rewarded)
3. →Annual review (commitment to monitor quarterly signals)

If the next decade favors financial stocks, energy, and cyclicals over technology, this entire recommendation reverses.

We recommend updating this analysis annually. The halal ETF decision is not "set it and forget it"—it requires active monitoring and intellectual humility about regime change.

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Conclusion: The Regime Dependency You Must Understand

The halal ETF question cannot be answered without understanding regimes:

The 2020–2025 Regime (Favorable to SPUS):

• →Zero rates → growth outperforms value
• →Tech dominance → SPUS 44% tech weight wins
• →Financials weakness → SPUS 0% financial weight wins
• →Result: +150.22% SPUS vs. +110.29% VOO

The Hypothetical 2025–2035 Regime (Unfavorable to SPUS):

• →Higher rates → financials outperform
• →Mean reversion → tech underperforms
• →Value comeback → SPUS concentrated loss
• →Expected result: VOO beats SPUS by 2–3% annually

Your job: Determine which regime you believe in, then act accordingly. This document provides the framework. The decision is yours.

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Data Sources & Methodology

Price History: Bloomberg Terminal, Yahoo Finance API, SEC filings
Performance Data: January 2, 2020 – December 22, 2025 (6.0 years)
Fee Data: Official fund prospectuses (Morningstar, Schwab, fund websites)
Factor Attribution: Academic literature on Shariah indices + sector analysis

Assumptions:

• →10% annual return for compounding scenarios (based on historical S&P 500 CAGR)
• →3% risk-free rate for Sharpe ratio calculations
• →No taxes or rebalancing costs (simplification)
• →Factor contributions estimated from sector performance + historical betas

Limitations:

• →6-year period is a strong bull market; results may not persist in bear markets
• →Technology overweight in halal ETFs benefited from the "AI mega-trend"; future performance uncertain
• →Smaller AUM of HLAL may improve as the fund grows
• →Fee structures subject to change; uses rates as of December 2025

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Quick Reference Table

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Appendix: The Three Biggest Risks to SPUS

Risk 1: Technology Sector Correction

• →Trigger: QQQ P/E exceeds 30x; profit warnings emerge; valuation compression
• →Impact: SPUS underperforms VOO by 5–8% annually
• →Probability: 30–40% within 5 years
• →Mitigation: Reduce SPUS to 60% allocation; diversify 40% to VOO/SPY

Risk 2: Financial Sector Rally

• →Trigger: Banks stabilize; lending accelerates; interest rate clarity improves
• →Impact: VOO beats SPUS by 2–3% annually (due to 13% weight in XLF)
• →Probability: 35–50% within 5 years
• →Mitigation: Monitor XLF vs. QQQ performance; exit if XLF leads for 6+ months

Risk 3: Factor Mean Reversion

• →Trigger: Growth premium compresses as capital floods into it
• →Impact: SPUS alpha shrinks from 2.48% to 0–0.5% annually
• →Probability: 50%+ within 10 years (historical norm)
• →Mitigation: Review annually; accept that outperformance may not persist

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This research is valid as of December 22, 2025. Annual review recommended. Regime monitoring is essential.

For Halal Terminal – Institutional-Grade Islamic Finance Research