Shariah-compliant investing in the GCC runs on more than one rulebook. Behind every "halal" ETF or index fund sits an index provider that defines the eligible universe, and a separate screening firm or Shariah Supervisory Board that performs Shariah screening and ongoing compliance monitoring. These are distinct roles, increasingly split across different institutions, and conflating them is one of the most common mistakes in Islamic finance coverage. For GCC investors allocating into Islamic products, understanding who does what is now due diligence.
The GCC remains the global centre of Islamic finance, accounting for the majority of global sukuk issuance and hosting many of the world's largest Shariah-compliant banks, asset managers, and investment products.
Shariah-compliant investing
It follows Islamic finance principles, which prohibit investments in businesses involved in activities such as conventional banking, alcohol, gambling, tobacco, pork-related products, and weapons. Companies must also satisfy financial screening criteria that limit debt levels, interest-based income, and other non-permissible activities. These rules are typically based on standards developed by the Accounting and Auditing Organization for Islamic Financial Institutions, although the exact screening methodology varies between index providers and Shariah advisory firms.
Leading Shariah Index Providers
MSCI Islamic Index Series
MSCI's Islamic indices apply business-activity screens (alcohol, tobacco, weapons, conventional finance, among others) plus financial-ratio screens on total assets, with methodology overseen by an independent Sharia Supervisory Committee of scholars. The MSCI GCC Countries Domestic IMI Islamic Index covers large, mid, and small-cap GCC equities relevant to Islamic investors. Beginning with newly launched Islamic indices in April 2025, MSCI began incorporating IdealRatings' business-involvement data into parts of its screening process. MSCI still owns and administers the underlying methodology; IdealRatings supplies data inputs rather than replacing MSCI's own screen.
S&P Dow Jones Indices
S&P DJI is best known globally for the Dow Jones Islamic Market Index (DJIM), launched in 1999 and widely regarded as the pioneering global Islamic equity benchmark and still one of the world's most widely tracked Islamic indices, alongside its regional S&P GCC Composite Shariah series and country-level indices (Saudi, UAE, Qatar, Kuwait, Bahrain, Oman). The GCC suite reflects the float available to GCC residents, typically larger than that available to foreign investors, and has been screened since 2007 by Ratings Intelligence Partners, a Kuwait-based Islamic finance consultancy, working alongside a dedicated Shariah Supervisory Board.
FTSE Russell
FTSE Russell operates the FTSE Shariah Index Series and the FTSE IdealRatings Islamic Index Series, screened respectively by Yasaar Limited (via formal fatwa certification) and IdealRatings. The FTSE Shariah series generally applies financial-ratio screens broadly aligned with AAOIFI principles, including approximately one-third limits on debt and certain non-compliant assets, together with a roughly 5% non-permissible income threshold, though exact ratios vary across individual series within the family. FTSE Russell's Islamic series marked its 20th anniversary in January 2026.
Solactive
A newer but fast-growing entrant, particularly for custom ETF mandates, Solactive's GCC Shariah Dividend Index targets high-yield, Shariah-compliant GCC equities using a dividend focus plus a 12-month momentum overlay. Per the index's June 2026 factsheet, top weights included Dubai Islamic Bank, ADNOC Distribution, Jarir Marketing, and SABIC Agri-Nutrients. The index carried a market capitalization of approximately $1.49 trillion and an indicative dividend yield of 6.2%, and underpins Lunate's Chimera Solactive GCC Shariah Dividend ETF (GCCDIV), which was listed on ADX in June 2026 as one of the first Shariah-compliant ETFs to provide diversified dividend exposure across multiple GCC equity markets. Solactive has become particularly popular among ETF issuers seeking bespoke thematic or regional Islamic strategies, given its flexibility in constructing custom benchmarks to a sponsor's specification.
Index Provider Comparison
Digital Islamic Investment Platforms
Wahed Invest
Wahed does not build its own benchmark. It is one of the largest digital Islamic investment platforms and distributes products tracking FTSE Russell's Shariah series; its flagship US-listed ETF, HLAL, tracks the FTSE Shariah USA Index and holds approximately $918 million in AUM as of early July 2026. Wahed has operated in the UAE since 2020, giving GCC retail investors direct platform access to FTSE-screened global equity exposure.
The Screening and Rating Agencies
While index providers construct Shariah-compliant benchmarks, specialist screening firms determine whether securities meet Islamic investment principles by assessing business activities, financial ratios, and ongoing compliance. Independent Shariah Supervisory Boards then provide governance and oversight.
Typical Financial Screening Thresholds (AAOIFI-Inspired, Varies by Provider)
GCC Market Context
The UAE's Islamic financial assets have surpassed $275 billion, representing nearly 30% of total Shariah-compliant assets across the GCC, per IFDI data underscoring why ADX, which as of end-May 2026 counted 24 listed ETFs (including the June 2026 GCCDIV listing) with total ETF market capitalization of AED 27.5 billion, is emerging as a regional proving ground for new Shariah products, as new listings continue at pace. Meanwhile, outstanding global sukuk exceeded US$1 trillion for the first time in 2025, according to multiple industry estimates, and this is pulling GCC-focused fixed-income benchmarks into mainstream terminals, with IdealRatings' AAOIFI screening now embedded in Bloomberg's core infrastructure. Islamic finance assets globally are estimated to exceed US$5 trillion (IFDI, 2025), with the GCC accounting for the majority of global sukuk issuance.
Why Holdings Differ Across Providers
Although most providers follow broadly similar AAOIFI-inspired principles, differences remain in financial-ratio calculations, treatment of preferred shares, handling of non-operating income, review schedules, and corporate-action adjustments. As a result, two Shariah indices tracking the same underlying market can have noticeably different constituents and weightings, a distinction that matters for portfolio construction, not just compliance box-ticking.
Illustrative GCC-Relevant Shariah ETFs by Index Provider
Bottom line
As Islamic ETFs and indices grow more sophisticated, investors should look beyond the "Shariah-compliant" label and examine the underlying benchmark, the screening methodology, review frequency, and the independence of the Sharia Supervisory Board. Differences in financial-ratio calculations, treatment of non-permissible income, and rebalancing schedules can produce meaningfully different portfolios, even among funds with similar investment objectives. As the GCC's ETF ecosystem continues to mature, understanding who builds the benchmark, who performs the screening, and how compliance is monitored will become an increasingly important part of investment due diligence for both institutional and retail investors.
