Stocks and other assets

Are leveraged ETFs halal?

Answered by the ShariaQuant team

No, on two counts. The 2x or 3x comes from swap and futures contracts rather than from shares the fund owns, and Malaysia's rules for Islamic ETFs allow derivatives only to hedge risk, never to create the exposure. The multiple is also leverage, with the financing cost built into the swap instead of charged as interest on a margin account, so a clean index underneath fixes neither problem.

Fatwas on ETFs and funds

This is Shariah screening and education, not financial advice. Rulings on newer products differ between scholars, so where a question is disputed we say so rather than pick a side for you. If your situation is unusual, ask your own scholar.

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Are stocks halal?What are the AAOIFI screening ratios?Do I need to purify my stock dividends?Are ETFs halal?

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