Manzil Russell Halal USA Broad Market ETF (MNZL)

The Manzil Russell Halal USA Broad Market ETF (MNZL) offers exposure to U.S. companies while filtering out those that conflict with Islamic financial principles. Rather than tracking all companies in the U.S. market, the fund holds a broad basket of stocks from industries and businesses considered permissible under Shariah law. For Muslims seeking to align investment returns with religious convictions, MNZL provides a bridge between the need for diversified long-term growth and adherence to ethical and religious guidelines around where capital may go.

What makes a company “halal” for this fund?

The fund applies a series of exclusions and qualitative screens derived from Islamic financial law. Companies are excluded if they derive significant revenue from alcohol, gambling, pork or non-halal meat processing, adult entertainment, conventional banking and interest-based lending, tobacco, weapons, or other sectors deemed incompatible with Islamic principles. The screening also typically looks at leverage and debt levels, because Islamic law places restrictions on how much debt a company can carry relative to assets and cash flow. A company with very high leverage that relies heavily on interest payments may not pass the screen, even if its business is otherwise permissible.

Beyond exclusions, the fund also looks for companies whose operations and governance align with Islamic values around transparency, ethical dealings, and avoidance of exploitative practices. This is inherently more subjective than simple sector exclusions, and different Islamic scholars and institutions sometimes disagree on edge cases. The Manzil ETFs work with recognized Islamic financial scholars and institutions to develop and maintain the screening process, ensuring it reflects widely accepted principles.

How does MNZL differ from a regular broad-market U.S. fund?

Because the fund excludes entire industries and applies additional debt and governance screens, the resulting portfolio is not identical to a market-cap-weighted index of all U.S. companies. MNZL tends to underweight or exclude sectors like banking, insurance, alcohol, gambling, and defence, which contain some of the largest companies in traditional indexes. This changes the composition and performance characteristics of the fund relative to the S&P 500 or other broad-market benchmarks.

Interestingly, many of the screens applied—avoiding high leverage, avoiding sin industries, seeking ethical governance—overlap with secular environmental, social, and governance (ESG) investing. Someone seeking to invest both responsibly by social standards and in accordance with Islamic principles will find MNZL aligns well with both goals. However, MNZL is fundamentally rooted in Islamic financial law, not in generic ESG principles, so the exclusions and screens differ in important ways.

Who is MNZL built for?

MNZL is designed first for Muslim investors in the United States and elsewhere who want broad U.S. stock-market exposure without compromising their religious convictions. Rather than avoiding the stock market entirely, or managing the complexity of trying to screen individual stocks against Islamic principles, investors can own MNZL and be confident the holdings align with Shariah law. The fund also appeals to non-Muslim investors who find the ethical screens aligned with their own values around responsible investment.

The fund’s lower expense ratio compared to actively managed Islamic investment products (like traditional Islamic mutual funds that employ dedicated research teams) makes it accessible to retail investors. The transparency of an ETF—you can see all holdings at any time—also gives investors confidence in what they own.

Performance and practical considerations

Because MNZL excludes significant chunks of the U.S. market, its returns will diverge from a traditional broad-market index. When sectors like banking or energy dominate market gains, MNZL may lag. When secular trends favour the companies that remain in the fund, it may outperform. Over the very long term, the performance difference should be modest if the excluded sectors perform in line with the overall market, but there will be periods of notable outperformance and underperformance.

The fund trades on an exchange like any other ETF, so shares can be bought and sold throughout the trading day. Investors should understand the fund’s Islamic screening methodology by reading the prospectus and reviewing which sectors and companies are included and excluded. Because the screening is rule-based and transparent, it is easier for shareholders to assess whether a particular holding aligns with their values. Anyone considering MNZL should also compare its historical returns and volatility to traditional broad-market U.S. funds and to other Islamic-screened products. The key decision is whether the ethical alignment is worth any performance difference, recognizing that over decades, that difference might be negligible or even favour the screened fund depending on how markets evolve.