VOO is one of the most owned ETFs on the planet. Managed by Vanguard, it tracks the S&P 500 index — the 500 largest publicly traded companies in the United States. With an expense ratio of just 0.03%, it is among the cheapest investment products ever created. Warren Buffett has famously recommended it. Millions of American investors hold it as their core retirement position.
For Muslim investors in both the United States and Canada, VOO comes up constantly. It is simple, cheap, and widely recommended. But is it halal?
The answer is no — VOO is not halal in its standard form. But understanding why, and what to do instead, is what this article is about.
What Does VOO Actually Hold?
VOO tracks the S&P 500 index, which includes 500 of the largest U.S. companies weighted by market capitalization. As of 2026, the top holdings include Apple, Microsoft, Nvidia, Amazon, Alphabet (Google), Meta, Berkshire Hathaway, and JPMorgan Chase.
At first glance this looks promising — tech companies dominate the top of the list, and many of them pass Sharia screening individually. But the S&P 500 is a broad market index, which means it holds companies from every sector of the economy — including sectors that are categorically excluded under Islamic finance principles.
Why VOO Is Not Considered Halal
There are two main reasons VOO fails Sharia screening.
Problem 1 — Financial Sector Holdings
The S&P 500 includes a significant allocation to the financial sector — approximately 12-15% of the total index depending on market conditions. This includes:
- JPMorgan Chase — the largest U.S. bank by assets, whose primary business is interest-based lending
- Bank of America, Wells Fargo, Citigroup — all excluded for the same reason
- Berkshire Hathaway — Warren Buffett’s conglomerate, which owns major financial businesses including insurance companies and a large stake in Bank of America
- Goldman Sachs, Morgan Stanley — investment banking and financial services
- Visa and Mastercard — these are sometimes considered borderline, but they facilitate interest-bearing transactions at scale
Conventional banking is categorically excluded under Islamic finance because the entire business model is built on charging interest — Riba. Owning an index that includes a 12-15% allocation to conventional banks means owning a fundamentally non-compliant portfolio, regardless of how strong the tech component is.
Problem 2 — Other Prohibited Sectors
Beyond financials, the S&P 500 also includes allocations to:
- Alcohol companies — companies with significant alcohol revenue within consumer staples and other sectors
- Defense contractors and weapons manufacturers — Lockheed Martin, Raytheon Technologies, Northrop Grumman
- Tobacco companies — Altria, Philip Morris
- Casino and gambling companies — depending on the current S&P composition
None of these can be made permissible through purification. They are categorically excluded regardless of their weighting in the index.
| VOO — Sharia Screening Summary Holds conventional banks (JPMorgan, BofA, Wells Fargo, etc.) → 🔴 Fail Holds weapons manufacturers (Lockheed, Raytheon) → 🔴 Fail Holds alcohol and tobacco companies → 🔴 Fail No Sharia supervisory board → 🔴 Fail No purification ratio published → 🔴 Fail Top tech holdings (AAPL, MSFT, NVDA) individually halal → ✅ Pass on this subset only OVERALL VERDICT: Not halal |
What About the Fact That Tech Makes Up 30%+ of VOO?
This is the most common argument we hear: ‘But VOO is mostly tech now — Apple, Microsoft, Nvidia, Amazon make up over 30% of it. Doesn’t that make it mostly okay?’
The answer is no, and here is why. Owning a fund that is 30% halal tech and 70% uninvestigated (with 15% in clearly haram financials) is not the same as owning a halal fund. The fund holds the haram companies just as definitively as it holds the halal ones.
Think of it this way: if you bought a basket of mixed fruit that included some rotten pieces, you would not eat the whole basket just because most pieces were fresh. You would either remove the rotten pieces — which is exactly what a halal ETF does — or buy a basket that only contained fresh fruit.
A halal ETF removes the prohibited companies and gives you only the compliant ones. VOO does not do this.
The Halal Alternative to VOO
The good news is that there is now a direct halal equivalent to VOO. In fact, there are several.
| Ticker | Fund Name | vs VOO | MER | Notes |
| SPUS | SP Funds S&P 500 Sharia ETF | Closest equivalent | 0.49% | Screens S&P 500 for Sharia — best substitute |
| HLAL | Wahed FTSE USA Shariah ETF | Very similar | 0.50% | U.S. large & mid-cap, FTSE methodology |
| ISUS | iShares MSCI USA Islamic ETF | Similar scope | 0.50% | BlackRock’s Islamic U.S. equity ETF |
| SPRE.TO | SP Funds S&P 500 Sharia (CAD) | For Canadians | ~0.49% | Same as SPUS but trades in CAD on TSX |
SPUS — The Most Direct VOO Substitute
SPUS is managed by SP Funds and applies AAOIFI Sharia screening to the S&P 500 universe. It removes the prohibited companies — primarily financial stocks, defense contractors, alcohol, and tobacco — and holds the remaining compliant companies.
The result is a portfolio that looks quite similar to VOO’s top holdings, but without the haram exposure. Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta remain prominent holdings (subject to their passing Sharia screening at each quarterly review). The financials are removed.
The cost is slightly higher than VOO — 0.49% versus VOO’s 0.03% — but this is a necessary price for the screening infrastructure. And compared to most actively managed funds, 0.49% is still very low.
SPUS has grown to over $2 billion in assets under management, making it the largest halal ETF listed on U.S. exchanges. It is available at Fidelity, Charles Schwab, Robinhood, and most other U.S. brokers.
What About VTI — Vanguard Total Stock Market ETF?
Some investors ask about VTI — Vanguard’s Total Stock Market ETF, which holds virtually every publicly traded U.S. company (around 3,700 stocks). If VOO is not halal, VTI is even further from compliance. It holds every financial company, every weapons manufacturer, every tobacco and alcohol company in the U.S. market with no filtering whatsoever.
VTI has the same fundamental problem as VOO, amplified. More companies means more prohibited holdings, not fewer. The answer is the same: not halal, replace with a Sharia-screened equivalent.
Canadian Investors — A Special Note on VOO
Canadian investors sometimes hold VOO directly through their RRSP or TFSA at Questrade or Wealthsimple. Beyond the Sharia compliance issue, there are also practical reasons why a Canadian-listed equivalent may be preferable.
SPRE.TO — the Canadian-listed version of the SPUS strategy — trades in CAD on the Toronto Stock Exchange. It eliminates the need for currency conversion, which can cost 1.5-2% at most bank brokerages if not using Norbert’s Gambit. It also functions cleanly inside a TFSA without the U.S. dividend withholding tax applying in the same way.
For Canadian Muslim investors who were holding or considering VOO: SPRE.TO in your TFSA, or SPUS in your RRSP (to benefit from the Canada-U.S. tax treaty waiving the withholding tax), are the recommended replacements.
What About Performance? Is SPUS Competitive With VOO?
This is a fair and important question. The honest answer is that SPUS has underperformed VOO in some periods and outperformed it in others. The difference in long-term compound returns has been small.
The reason performance tracks closely is that the financial sector — the main thing being removed — is not the primary driver of S&P 500 returns over most long-term periods. Technology has been the dominant driver, and halal indices are effectively overweight technology relative to conventional indices. In technology bull markets, halal ETFs often outperform. In periods when financials do well, they may lag slightly.
What matters for Muslim investors is not that SPUS perfectly matches VOO — it is that SPUS gives you competitive exposure to U.S. equities without compromising your principles. The expected long-term return difference is small. The principle difference is significant.
Final Verdict
| Is VOO Halal? — The Bottom Line VOO is NOT halal. It holds a significant allocation to conventional banks, insurance companies, weapons manufacturers, and other prohibited sectors that cannot be corrected through purification. The direct halal substitute is SPUS (in USD) or SPRE.TO (in CAD for Canadian investors). Both apply AAOIFI Sharia screening to the S&P 500 universe and are available at major brokers. The performance difference relative to VOO has historically been small. The principled difference is significant — and it is entirely possible to build a competitive long-term portfolio without VOO. |
To check the current Sharia compliance status of any ETF or individual stock, use our Free Halal ETF & Stock Screener at halaletfhub.com/screener — updated regularly for both Canadian and U.S. investors.
— Rachid Fouadi, M.Sc., CPA ·
