Dubai-based ASB Capital, in partnership with Xtrackers by DWS, has launched the Xtrackers II Salam USD Global Aggregate Sukuk UCITS ETF (ticker: XASB) on the London Stock Exchange (LSE). The fund tracks the Bloomberg Global USD 500 Million Sukuk Index, offering exposure to more than 150 USD-denominated sukuk in a single trade, with a total expense ratio (TER) of 0.40%. The listing was marked with an LSE bell-ringing ceremony on 4 November 2025.
Turning sukuk into an investable, exchange-traded market
Sukuk are Sharia-compliant fixed-income instruments backed by tangible assets and have become a core funding channel for sovereigns and high-grade corporates, yet they remain cumbersome for investors to assemble directly given high minimums and uneven secondary-market liquidity. XASB brings that market into a UCITS-regulated ETF structure, providing a diversified, transparent, and tradable route to global USD sukuk exposure.
For Xtrackers, this marks a milestone in its product evolution as it introduces its first Sharia-compliant ETF, developed together with ASB Capital as distribution partner and co-sponsor. The collaboration extends DWS’s fixed-income capabilities into Islamic finance, reflecting a long-term commitment to Sharia-aligned investing on a globally recognised platform.
The launch also comes amid renewed momentum in the sukuk market, following two Saudi sukuk ETF debuts by State Street and the Public Investment Fund (PIF) in London and Singapore earlier this year, underscoring the growing internationalisation of Sharia-compliant fixed income.
ETF structure & mechanics
(As of launch; sources: DWS/Xtrackers, ASB Capital, LSE, ETF Express)
Sources: DWS product page; ASB Capital announcement; LSE welcome note; ETF Express; Börse Frankfurt instrument file.
Positioning & differentiators
The Xtrackers II Salam USD Global Aggregate Sukuk UCITS ETF is built to make Sharia-compliant fixed income as accessible as mainstream bond markets. Its USD-only benchmark, with a $500 million minimum issue size, captures a liquid cross-section of sovereign, government-related, and corporate sukuk, tilting the portfolio toward larger, seasoned issuers and away from niche or thinly traded lines. This design enhances tradability and tracking stability, key for institutional portfolio use.
At 0.40 % TER, the ETF undercuts most existing sukuk funds, setting a new reference point for cost efficiency in Islamic fixed income. The launch also expands Xtrackers’ global ETF suite into the Sharia space for the first time, institutionalising sukuk access on a Tier-1 exchange and reinforcing DWS’s positioning as a scale provider of regulated thematic and income ETFs.
How the index works (and why it matters)
The Bloomberg Global USD 500 Million Sukuk Index applies three principal filters:
- Sharia screening: Excluding non-compliant business activities and ensuring leverage and interest-income ratios meet Islamic standards.
- Size and liquidity: Requiring each line to have ≥ USD 500 million outstanding, improving tradability.
- Issuer diversity: Spanning sovereign, government-related, and corporate sukuk across credit grades.
Because it is USD-only, the index avoids currency volatility found in multi-currency sukuk benchmarks and aligns naturally with global sukuk issuance, which is heavily USD-denominated. resulting universe is liquid and globally diversified, with a majority of holdings rated investment-grade and dominated by sovereign and government-related issuers from the GCC and Southeast Asia
Risks & considerations
Structural nuances: Sukuk instruments differ from conventional bonds in their asset-backed structures and legal frameworks. Recovery mechanisms vary, so investors should review prospectus language around asset-based versus asset-backed arrangements and purchase undertakings.
Concentration profile: A USD-only universe with a $500 million minimum issue size will naturally tilt toward GCC sovereigns and quasi-sovereigns, enhancing liquidity but reducing breadth relative to all-currency sukuk indices.
Market factors: Like any bond ETF, XASB is sensitive to interest-rate moves and credit spreads; higher-for-longer rates could weigh on total returns in the short term.
Brief outlook
The partnership between ASB Capital and Xtrackers by DWS represents a notable step forward for Sharia-compliant ETFs. By pairing institutional-grade index design with UCITS governance and London visibility, XASB opens the sukuk market to a broader base of global and regional investors seeking income stability and diversification within Islamic finance principles.
As the fund scales, the key watchpoints will be assets, spreads, and distribution execution. If liquidity builds as expected, XASB could emerge as a benchmark vehicle for USD sukuk exposure, a cornerstone for portfolios bridging ethical investing and institutional fixed income.
