How Much of the S&P 500 Is Halal in 2026? All Five Shariah Standards Compared

Halal Terminal Research

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⚠️ IMPORTANT LEGAL NOTICE (click to expand)

This document is general educational research. It is provided for informational purposes only and does not constitute investment advice, portfolio management, a solicitation, or any inducement to transact in any financial instrument.

No personalization. The analysis does not take into account any individual's financial situation, objectives, or risk profile.

Not a fatwa. Compliance verdicts are computed from public financial disclosures under the five methodologies described in §2. Results are not a religious ruling and should not substitute for guidance from a qualified Islamic scholar or Shariah advisor.

Point-in-time snapshot. All figures reflect a single snapshot date, July 15, 2026. Verdicts change as companies file new financial statements; nothing here implies the future compliance status of any name.

Data and scope. Figures are derived from SEC filings and the Halal Terminal API as of the snapshot date. Company names and tickers appear solely as screening outcomes, never as recommendations.

Regulatory positioning. This text is intended to qualify as non-advisory research / educational analysis under Swiss regulatory expectations (FinSA / FINMA), with a focus on methodology, evidence, and limitations.

For complete disclaimers, see Legal Disclaimers.

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1. Executive Summary

"Is this stock halal?" sounds like a yes-or-no question. For a large share of the US large-cap universe, it is not. The answer depends on which Shariah screening standard you ask, and the five major standards (AAOIFI, Dow Jones Islamic Market, FTSE Shariah, MSCI Islamic, and S&P Shariah) disagree with each other more often than most investors realize.

This study runs the full S&P 500, as represented by the 504 published holdings of a leading S&P 500 tracker on July 15, 2026, through all five methodologies simultaneously, using the same screening engine that powers Halal Terminal's customer-facing verdicts. Three headline findings emerge.

First, the pass rate depends heavily on the standard. Under AAOIFI, the methodology most commonly cited as the scholarly benchmark, 53.8% of the index's companies screen compliant. But only 37.9% of companies (191 names) pass all five major standards at once. A verdict that survives every mainstream methodology is a materially rarer thing than a verdict under any single one.

Second, weighting changes the picture dramatically. By count, roughly half the index screens compliant under AAOIFI. By index weight, 73.8% passes AAOIFI, and 57.2% of the index's weight passes unanimously under all five standards. The reason is structural: the mega-cap technology complex that dominates the top of the index (Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta) screens clean under every methodology. The compliant slice of the S&P 500 is much bigger than a simple headcount suggests, because the biggest companies are disproportionately in it.

Third, disagreement is not an edge case. 113 companies, 22.4% of the index, receive contradictory verdicts depending on which standard is applied: compliant under at least one methodology, non-compliant under at least one other. For more than a fifth of America's largest companies, "is X halal" genuinely has no single answer. Anyone comparing verdicts across two screening apps and finding they conflict is not necessarily looking at a data error; they may be looking at two different, internally consistent methodologies.

The rest of this study documents where those numbers come from, which companies sit in each bucket, why the standards diverge, and what the sector-level consequences are for anyone building a Shariah-conscious portfolio from US large caps.

2. Methodology

Universe. The 504 published holdings of a leading S&P 500 tracker as of July 2026. Using tracker holdings rather than a licensed constituent list keeps the universe fully public and reproducible; it also explains why the row count is 504 rather than exactly 500 (multiple share classes of the same issuer, such as GOOGL and GOOG, are separate rows with separate weights).

Verdicts. Every holding was screened by the Halal Terminal screening engine, computing verdicts from SEC filings under each of the five methodologies:

• →AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions, Shariah Standard No. 21)
• →DJIM (Dow Jones Islamic Market methodology)
• →FTSE (FTSE Shariah methodology)
• →MSCI (MSCI Islamic Index Series methodology)
• →S&P Shariah (the S&P Shariah index methodology; written "S&P Shariah" throughout to distinguish the standard from the S&P 500 index itself)

Each methodology applies two layers. The business-activity screen excludes companies whose core business is impermissible (conventional banking and lending, conventional insurance, tobacco, alcohol, gambling, certain entertainment businesses); this layer is broadly shared across all five standards, which is why the sector-level exclusions in §6 look similar no matter which standard you pick. The financial-ratio screens (interest-bearing debt, interest-bearing cash and investments, impermissible income) differ per standard in both thresholds and denominators, and those differences drive almost all of the disagreement documented in §5.

Coverage. Of the 504 holdings rows, 19 rows (3.8%) were excluded because the published holdings file could not be cleanly mapped to a screened issuer: multi-class or recently renamed symbols and holdings-file artifacts such as BRK.B, SNDK, BNY, MRSH, HONA, FISV, FDXF, and BF.B. That leaves 485 classifiable names. Percentages below are quoted both against the full 504-row index and against the 485 classifiable names; weight-based figures are quoted against total index weight.

Snapshot date. One date: July 15, 2026. Every verdict reflects the most recent SEC filing available on that date. This is a photograph, not a film; a companion Halal Terminal study tracks how verdicts move quarter by quarter (see §8).

Data source. The Halal Terminal API and SEC filings. No third-party compliance list was consulted; all five verdicts per company are computed independently from the same underlying financial statements, which is what makes the cross-standard comparison apples-to-apples.

3. Results by Standard

The headline table. "% of index" is measured against all 504 rows, "% of classifiable" against the 485 names with verdicts, and "% by weight" against total index weight.

Two clusters are immediately visible.

The AAOIFI / DJIM / S&P Shariah cluster passes roughly 54% to 55% of the index by count and roughly 73% to 74% by weight. The three methodologies are not identical (they disagree on individual names, as §5 shows) but they land in the same place in aggregate.

The FTSE / MSCI cluster is markedly stricter, passing roughly 43% to 44% by count and roughly 59% by weight. That is an aggregate gap of about ten to twelve percentage points of the index, or roughly 50 to 60 companies, relative to the first cluster.

Why the gap? Two mechanical differences, not business-activity judgments (the sector exclusions are broadly shared).

First, the denominator. DJIM and S&P Shariah test leverage against a trailing average of market capitalization (24 and 36 months respectively, their only remaining financial screen after the 2023 simplifications). At July 2026 valuations, market caps are large relative to balance sheets, so a given debt load produces a small ratio and clears the 33% line comfortably. FTSE and MSCI test the same debt against total assets, which does not inflate with the market, so the identical balance sheet produces a larger ratio.

Second, the liquidity numerator. FTSE and MSCI also cap cash plus interest-bearing securities at 33.33% of total assets, a broader numerator than AAOIFI's cash and cash equivalents reading, so cash-rich operators can clear AAOIFI's 30% line and still breach the FTSE/MSCI cash screen. AAOIFI sits between the clusters in design (asset-based like FTSE/MSCI, but with a 30% threshold and the narrower numerator) and lands with the lenient cluster in aggregate at this snapshot.

A company with a debt load that is comfortable under one denominator can breach the limit under another without anything about the business changing; §5 shows this mechanism operating name by name.

The practical takeaway from this table alone: quoting a single "X% of the S&P 500 is halal" figure without naming the standard is underspecified. The honest range in July 2026 runs from 43.5% to 55.4% by count, and from 58.8% to 74.3% by weight, depending on methodology.

4. The Consensus View

Requiring agreement across all five standards collapses the ambiguity and splits the index into three buckets:

4.1 The unanimous passes

191 companies pass every methodology. By count that is 37.9% of the index; by weight it is 57.2%, and the weight concentration is the story. The ten largest unanimous passes by index weight:

These ten rows alone carry roughly 36% of the entire index's weight, and every one of them screens compliant under every mainstream standard. The pattern is not a coincidence: the largest US companies are asset-light, equity-funded technology businesses with permissible core activities and balance sheets that clear even the strictest ratio configurations. A Shariah-conscious investor restricted to the unanimous-pass universe still holds the commanding heights of the index.

4.2 The unanimous fails

181 companies fail every methodology: 35.9% of the index by count, but only 20.9% by weight, confirming that the excluded universe skews toward mid-weight names. The largest unanimous fails by index weight: JPM (1.39%), V (0.92%), MA (0.67%), UNH (0.60%), BAC (0.60%), GE (0.57%), NFLX (0.48%), GS (0.48%), PLTR (0.46%), PM (0.43%), WFC (0.42%), and MS (0.41%).

The reasons cluster tightly:

• →Conventional finance. JPM, BAC, GS, WFC, and MS are banks or investment banks; V and MA operate payment networks embedded in the conventional credit system. Interest-based intermediation is the business, so no ratio threshold can rescue the verdict; the business-activity screen is binding under all five standards.
• →Conventional insurance. UNH's managed-care model fails the insurance-related activity screens across methodologies.
• →Entertainment and tobacco. NFLX fails on entertainment-related activity screens; PM fails on tobacco.
• →Ratio failures. GE carries a capital structure that breaches the financial screens under every configuration simultaneously.

The most instructive name in the list is PLTR. Palantir is a software company, not a bank, an insurer, or a tobacco firm, yet it fails all five standards on financial-ratio grounds. It is a useful reminder that the ratio screens have real teeth outside the obviously excluded sectors: a permissible business with the wrong balance-sheet profile fails everywhere, exactly as a bank does.

5. The Disagreement Zone

113 companies, 22.4% of the index, sit between the two consensus buckets: compliant under at least one standard and non-compliant under at least one other. This is the zone where "is X halal" has no single answer, and it is worth understanding its internal structure.

5.1 The dominant pattern

The most common split mirrors the two clusters from §3: pass AAOIFI, DJIM, and S&P Shariah; fail FTSE and MSCI. The largest names in the disagreement zone all follow it:

These are household-name pharmaceutical, industrial, and consumer-staples companies with unquestionably permissible core businesses. What splits them is leverage measured against different denominators: a debt load that clears the AAOIFI, DJIM, and S&P Shariah ratio configurations breaches the FTSE and MSCI ones. Broadcom, at 2.81% of the index, is the single heaviest company in the world for which the five major standards cannot agree on a verdict.

5.2 The other 46 splits

It would be tempting to summarize the disagreement zone as "two strict standards versus three lenient ones." The data says otherwise: 46 of the 113 splits (about four in ten) follow some other pattern. Examples from the snapshot:

• →IBM passes only DJIM and fails AAOIFI, FTSE, MSCI, and S&P Shariah.
• →ORCL passes DJIM and S&P Shariah but fails AAOIFI, FTSE, and MSCI.
• →AMGN passes only AAOIFI and fails the other four.
• →PFE passes only FTSE and MSCI, the two standards that fail the entire §5.1 table, while failing AAOIFI, DJIM, and S&P Shariah.
• →DELL passes AAOIFI, DJIM, FTSE, and MSCI, everything except S&P Shariah.

Pfizer is the clearest counterexample to the strict-versus-lenient framing: the "strict" cluster passes it and the "lenient" cluster fails it, because Pfizer's particular balance-sheet shape happens to sit on opposite sides of the different denominator constructions. Dell fails exactly one methodology, and it is one of the supposedly lenient ones.

The conclusion is that the five standards are genuinely different tests, not five points on a single strictness dial. Each combination of threshold, denominator, and averaging convention draws its own boundary through the universe, and the boundaries cross. A screening tool that shows one verdict without saying which methodology produced it is compressing away exactly the information the 113 split names need.

6. Sector Anatomy (AAOIFI)

Holding the standard fixed (AAOIFI, the scholarly benchmark) and cutting by sector shows where compliance lives in the index. Pass rates among classifiable names per sector:

The spread is enormous: from 82% in Technology to literally zero in Financial Services, and the pattern is structural rather than incidental.

Financial Services zeroes out because the business-activity screen, not any ratio, is binding: all 65 classifiable financials in the index run on interest spreads, conventional underwriting, or fees on interest-bearing products. Utilities (23%) fail overwhelmingly on capital structure; regulated infrastructure is habitually debt-financed, and the debt ratios breach the AAOIFI threshold across most of the sector. Real Estate (35%) reflects the REIT financing model, which similarly leans on leverage. Communication Services (33%) combines heavily indebted telecom carriers with media and entertainment names caught by the activity screens.

At the other pole, Technology (82%), Basic Materials (80%), Industrials (77%), and Energy (71%) pass at high rates: permissible core businesses, and (especially in technology) balance sheets funded by equity and retained earnings rather than debt.

This table is the structural explanation for a phenomenon every Shariah-conscious investor notices: halal portfolios end up tech-heavy. It is not a stylistic preference of fund managers and not a bet on the sector. Remove an entire 65-name financial sector, three quarters of the utilities, two thirds of the real estate and communication-services names, and what remains is mechanically tilted toward technology and industrials. The tilt is a consequence of the screens themselves, applied consistently to how corporate America finances itself. Anyone comparing a Shariah-screened portfolio against the unscreened index should expect the sector distribution to differ for exactly this reason.

7. Purification

Passing a screen does not mean a company's revenue is perfectly pure. Every standard tolerates a small sliver of impermissible income (interest on corporate cash, minor non-compliant revenue lines) below its threshold, and the conventional remedy is purification: donating the impermissible fraction of dividends received to charity, so the investor's own income stream is cleansed of it.

Among the 271 AAOIFI-compliant names in this snapshot, the required purification is small: the median purification rate is 0.26% of dividends, and even the 90th percentile is 1.55%. In practical terms, a typical compliant S&P 500 name asks its shareholder to purify about a quarter of one percent of each dividend payment; nine out of ten compliant names ask for less than about a sixtieth of it. Purification is a real obligation under the methodologies that prescribe it, but at S&P 500 scale it is an accounting discipline, not a material cost. Halal Terminal computes per-name purification rates from the same filings that drive the compliance verdicts.

8. Limitations

The honest boundaries of this study:

1. →A snapshot, not a trajectory. Every figure is dated July 15, 2026. Verdicts move when companies file new balance sheets; a company can cross a ratio threshold in either direction in a single quarter. Our companion study, Dynamic Shariah Compliance: An Eight-Quarter Trajectory Study of the S&P 500, measures exactly how much verdicts move over time and should be read alongside this one.
2. →19 excluded rows. 3.8% of the holdings file could not be mapped to screened issuers (multi-class and renamed symbols such as BRK.B and BF.B). Most of the excluded rows would plausibly land in the unanimous-fail or split buckets if mapped by hand (Berkshire Hathaway is a conventional-insurance conglomerate, Brown-Forman is an alcohol producer), so the headline pass rates are unlikely to be understated by the exclusions, but we report them as unclassified rather than guessing.
3. →Verdicts follow filings. The engine screens the most recent SEC filings available on the snapshot date. A company mid-way between filings is judged on its last reported balance sheet.
4. →Methodology implementations. The five standards are implemented as published methodology rules applied to standardized filing data. Index providers additionally apply committee judgment, buffer rules, and review calendars that a pure rules engine does not replicate; a name near a threshold can be classified differently by the official index than by the rules alone.
5. →Educational only. Nothing here is a fatwa, a recommendation, or advice. The correct use of this study is to understand how the standards behave in aggregate, then apply your own chosen methodology, with your own scholarly guidance, to your own decisions.

9. How This Compares With Other Published Screens

No two screeners publish identical numbers, and the differences are informative rather than embarrassing. The public reference points we are aware of, against this study's figures:

The honest summary: every serious screen of the S&P 500 lands in the same neighborhood, and the residual differences are what §3 and §5 are about. Ratio implementations, data pipelines, snapshot dates, and committee judgment move individual names across the line; they do not move the aggregate picture much.

10. Screen It Yourself

Every number in this study came out of the same engine you can use directly:

• →Check any stock free at /stocks: per-name verdicts under all five standards, with the failing ratios shown, not just a binary answer.
• →Looking at funds instead of single names? The halal ETF guide applies the same lens to the ETF universe.
• →For portfolios, Halal Terminal screens full holdings lists, tracks verdict changes as new filings land, and computes purification amounts per position.

The 113 split-verdict names are the reason multi-standard screening exists: for a fifth of the S&P 500, the answer to "is it halal" starts with "under which standard?" Now you can ask the question properly.