Looking for a way to invest that’s halal, hassle-free, and has solid long-term potential? Shariah-compliant Exchange-Traded Funds (ETFs) might be exactly what you’re looking for. In 2025, Malaysians, both Muslims and non-Muslims, are increasingly turning to these ethical investment options. They combine religious values with modern diversification and global exposure.
This guide breaks it all down: what Shariah ETFs are, why they’re worth considering, which ones are doing well in 2025, and how you can start investing from as low as RM100.
What Are Shariah-Compliant ETFs?
Shariah-compliant ETFs (also known as i-ETFs) are funds that trade on Bursa Malaysia and invest only in assets approved by Islamic finance principles. That means:
- No interest-based earnings (riba)
- No uncertainty or gambling (gharar or maysir)
- No exposure to forbidden sectors like alcohol, pork, tobacco, or conventional banks
Every ETF is monitored by a Shariah committee to ensure strict compliance. Any non-compliant earnings? They’re purified and donated to charity.
New in 2025: The Securities Commission Malaysia updated its screening methodology. It now uses “Total Income” as the benchmark for assessing compliance, making things more transparent and fair.
Why More Malaysians Are Choosing Shariah ETFs
- 100% Halal & Ethical: Invest without compromising your values
- Diversification: Get exposure to 20 to 100+ stocks in a single buy
- Low Fees: Annual costs as low as 0.48%, compared to 1.5%+ for unit trusts
- Easy to Trade: Just like buying stocks, but safer and more stable
- Global Access: From US tech giants to China’s halal-listed stocks
Top Shariah ETFs in Malaysia (2025)
Here are the most promising Shariah-compliant ETFs available on Bursa Malaysia this year:
Malaysia-Based ETFs
- Eq8 Malaysia Titans 25 ETF (0821EA): Invests in large Malaysian stocks like Tenaga, IHH. 5Y return: -0.82% CAGR
- Eq8 MSCI Malaysia Islamic Dividend ETF (0824EA): Targets dividend-paying stocks. 5Y return: 2.72%
- Eq8 Waqf ETF (0839EA): Malaysia’s first Waqf-featured ETF. Half the dividend goes to charity. Launched in Dec 2024
International & Thematic Picks
- Eq8 Dow Jones US Titans 50 ETF (0827EA): US-based, Shariah-compliant tech giants like Apple & Microsoft. 5Y CAGR: 19.6%
- TradePlus Shariah Gold Tracker (0828EA): Backed by physical gold. 1Y return: 38.1%
- VP-DJ Shariah China A-Shares 100 ETF (0838EA): Offers exposure to China’s top halal-compliant stocks
- Eq8 MSCI SEA Islamic Dividend ETF (0825EA): Focused on dividend stocks across Southeast Asia. 5Y CAGR: 3.89%
How Much Can You Actually Earn?
If you invested RM10,000 into the Eq8 US Titans 50 ETF and held it for 5 years with a 19.6% CAGR:
- After 5 years: ~RM24,485
- After 10 years: ~RM59,961 (if returns stay consistent)
Gold also did well, TradePlus’s Shariah Gold Tracker jumped 38% in just the last year, thanks to global market uncertainty.
Shariah ETFs vs Other Halal Investments
| Investment Type | Returns | Risk | Fees | Diversification | Minimum |
|---|---|---|---|---|---|
| Shariah ETFs | 6%–20% | Medium | Low (0.4–0.8%) | Yes | RM100+ |
| Islamic Unit Trusts | 4%–10% | Low–Medium | High (1.5–5%) | Yes | RM100+ |
| Islamic FDs | 2.5–3.5% | Very Low | None | No | RM1,000+ |
| Direct Stocks | 5–25%+ | High | Low (Brokerage) | No | RM100+ |
Bottom line: Shariah ETFs give you the best of both worlds, low cost and strong diversification with halal assurance.
How to Start Investing in Shariah ETFs (Even as a Beginner)
Step 1: Open an Islamic Trading Account + CDS Account
Platforms: Rakuten Trade, MIDF Invest, Maybank, M+ Online, Kenanga, CGS-CIMB
Make sure it’s a Shariah-compliant account.
Step 2: Fund Your Account
Most brokers support FPX transfers.
Step 3: Buy the ETF
Search for the stock code (e.g., 0827EA)
Buy minimum 100 units (~RM100–RM300 depending on price)
Step 4: Invest Consistently
Reinvest dividends
Use Dollar-Cost Averaging (DCA) monthly or quarterly
What Are the Risks?
No investment is risk-free, but you can manage the downside.
- Market Volatility: ETF prices follow global markets
- Currency Fluctuations: Especially for US or China ETFs
- Low Trading Volume: Some funds have fewer buyers/sellers
- Tracking Error: ETFs may slightly underperform their benchmark
- Reclassification Risk: Stocks can be removed from the Shariah list
Smart Tips to Minimize Risk:
- Mix your portfolio (Gold + US + Malaysia + China)
- Stick with it long-term (5–10 years)
- Automate your investments monthly
Final Thoughts: Should You Start Investing in Shariah ETFs?
If you care about halal investing but also want strong returns and simplicity, Shariah ETFs are one of the smartest choices in 2025. They give you access to global markets, require minimal effort, and cost less than traditional unit trusts.
Perfect for:
- Muslim investors seeking ethical, riba-free portfolios
- Beginners who want to start small (RM100 is enough)
- Anyone tired of high fees from unit trusts
Start small, stay consistent, and let compounding do its magic.
Further Reading
- How to Become Rich in Malaysia (2025 Guide)
- REIT Malaysia 2025: How to Invest in Real Estate Without Owning Property
- Malaysia’s Water Investment Boom: Build Wealth with Water Stocks & Rights (2024)
Disclaimer: This article is for informational purposes only. Always do your own research or consult a financial advisor before making trading decisions.
