What Are The Best Halal Investments Options in the UK Right Now

In 2025, the UK's Islamic finance sector is experiencing significant growth, reflecting a rising demand for ethical financial products. With assets anticipated to surpass $5 trillion globally, the Islamic finance industry is becoming increasingly influential . In the UK, the market is projected to grow at a compound annual growth rate (CAGR) of 10.2% from 2024 to 2030.

This guide aims to provide a detailed overview of the best halal investment options available in the UK, helping you make informed decisions that align with your faith and financial goals.​

1. Sukuk (Islamic Bonds)

Sukuk are Shariah-compliant financial instruments that represent ownership in tangible assets, services, or projects. Unlike conventional bonds that involve interest payments, Sukuk generate returns through profit-sharing or rental income, aligning with Islamic principles that prohibit riba (interest). The global Sukuk market is projected to reach $190–$200 billion in 2025, indicating robust growth citeturn0search2.

Pros:

• Ethical investment aligned with Islamic principles.

• Diversification of investment portfolio.

• Regular income streams.

Cons:

• Complex structures may require thorough understanding.

• Limited availability in certain markets.

2. Shariah-Compliant Real Estate Investments

Investing in real estate through Shariah-compliant means involves avoiding interest-based financing and ensuring ethical property dealings. Platforms like Acorn Property Invest offer such opportunities in the UK.

Pros:

• Tangible asset with potential for capital appreciation.

• Regular rental income.

• Alignment with ethical investment principles.

Cons:

• Market fluctuations can affect property values.

• Requires significant capital for direct investments.

3. Gold and Precious Metals

Gold is considered a stable investment and is permissible in Islam when purchased outright and held physically. It's essential to avoid speculative trading and ensure immediate possession.

Pros:

• Hedge against inflation and currency devaluation.

• Globally recognized store of value.

• High liquidity.

Cons:

• No regular income like dividends or rent.

• Storage and insurance costs for physical gold.

4. Halal Mutual Funds

Halal mutual funds pool investors' money to invest in Shariah-compliant stocks and assets. These funds are screened to exclude companies involved in prohibited activities.

Pros:

• Professional management and diversification.

• Accessible to investors with varying capital levels.

• Regular monitoring for Shariah compliance.

Cons:

• Management fees can impact returns.

• Performance depends on market conditions.

5. Islamic ETFs

Exchange-Traded Funds (ETFs) that comply with Islamic principles offer diversified portfolios. Examples include the SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS) and Wahed FTSE USA Shariah ETF (HLAL).

Pros:

• Lower expense ratios compared to mutual funds.

• Real-time trading flexibility.

• Exposure to a broad market segment.

Cons:

• Subject to market volatility.

• Limited availability of Shariah-compliant ETFs.

6. Islamic Fintech Platforms

Platforms like Wahed Invest and Zoya facilitate halal investing by offering user-friendly interfaces and Shariah-compliant investment options. These platforms have made ethical investing more accessible.

Pros:

• Ease of access and user-friendly interfaces.

• Low minimum investment requirements.

• Regular Shariah compliance audits.

Cons:

• Limited customer support in some cases.

• May lack comprehensive financial planning tools.

7. Shariah-Compliant Stocks

Investing in individual stocks that meet Islamic criteria involves analysing companies' financials and business activities. Tools like Zoya assist investors in identifying compliant stocks.

Pros:

• Direct control over investment choices.

• Potential for significant capital gains.

• Alignment with personal ethical values.

Cons:

• Requires in-depth research and monitoring.

• Higher risk due to lack of diversification.

8. Halal Crowdfunding

Platforms like Yielders offer halal crowdfunding opportunities, allowing investors to participate in property investments without interest-based financing.

Pros:

• Access to real estate investments with lower capital.

• Shariah-compliant investment structures.

• Potential for regular rental income.

Cons:

• Limited liquidity compared to publicly traded investments.

• Due diligence required to assess project viability.

9. Islamic Pension Funds

Shariah-compliant pension funds, such as those offered by Nest and People's Partnership, provide retirement savings options that align with Islamic principles. In 2024, Nest's sharia fund attracted over £180 million, reflecting growing demand.

Pros:

• Ethical retirement savings aligned with faith.

• Professional fund management.

• Potential tax benefits.

Cons:

• Limited investment choices compared to conventional pensions.

• Potentially higher fees.

10. Shariah-Compliant Private Equity

Private equity refers to investments made directly in private companies, often involving funding for growth or restructuring. Shariah-compliant private equity firms focus on ethical business practices that do not violate Islamic guidelines, such as avoiding haram industries like alcohol or gambling.

Pros:

• High Return Potential: Private equity investments often provide higher returns compared to traditional stock markets.

• Strategic Influence: Investors in private equity can have a say in the direction and strategy of the company they invest in.

• Ethical Investment: Aligns with Islamic values by avoiding prohibited sectors and focusing on ethical business practices.

Cons:

• Long-Term Commitment: Private equity investments typically have long investment horizons, ranging from 5 to 10 years.

• High Risk: These investments carry a significant risk due to the nature of private markets, which can lead to potential losses.

11. Halal Venture Capital

Venture capital involves investing in early-stage startups with high growth potential. Islamic venture capital focuses on ethical startups that adhere to Shariah principles. This type of investment allows individuals to support innovation while remaining within Islamic guidelines.

Pros:

• Support for Innovation: Venture capital supports innovative companies that may not receive funding through traditional means.

• High Growth Potential: These investments can result in large returns if the startup becomes successful.

• Shariah-Compliant: Funds are directed to startups that operate within halal industries.

Cons:

• High Risk of Failure: Many startups fail, making venture capital a highly risky investment.

• Lack of Liquidity: As with private equity, these investments are illiquid and typically cannot be sold quickly.

12. Halal Peer-to-Peer Lending

Peer-to-peer lending (P2P) platforms allow investors to lend money directly to borrowers in exchange for interest or equity stakes. Islamic P2P lending platforms avoid interest-based transactions, ensuring compliance with Shariah law. These platforms are gaining popularity as an alternative investment option in the halal space.

Pros:

• Passive Income: Investors can earn regular income through profit-sharing agreements rather than interest.

• Diversification: P2P lending offers an additional way to diversify investment portfolios.

• Accessibility: These platforms are often accessible with lower minimum investment amounts.

Cons:

• Risk of Default: Borrowers may default on their loans, leading to potential losses.

• Limited Regulation: Some platforms may not have the same level of regulatory oversight as traditional financial institutions.

13. Halal Commodities Trading

Commodities trading involves buying and selling raw materials like oil, gold, or agricultural products. Shariah-compliant commodities trading ensures that all transactions are free from interest and speculative behavior, aligning with Islamic finance principles.

Pros:

• Tangible Assets: Commodities are tangible, physical assets that can hold their value over time.

• Hedge Against Inflation: Commodities like gold are often used as a hedge against inflation or currency devaluation.

• Diversification: Adds a unique dimension to an investment portfolio by including real assets.

Cons:

• Market Volatility: Commodities can be volatile, subject to fluctuations based on geopolitical events or market conditions.

• Complexity: Understanding commodity markets requires knowledge and experience, which may not be suitable for all investors.

14. Shariah-Compliant ETFs (Exchange-Traded Funds)

Shariah-compliant ETFs are investment funds that track specific market indices but exclude companies involved in non-halal activities. ETFs offer diversification and lower costs compared to mutual funds. They are traded on the stock exchange, providing flexibility and liquidity to investors.

Pros:

• Low Fees: ETFs generally have lower management fees compared to mutual funds.

• Diversification: ETFs offer instant diversification across various industries and asset classes.

• Transparency: ETFs are highly transparent, as their holdings are publicly disclosed.

Cons:

• Limited Shariah-Compliant Options: Not all ETFs are Shariah-compliant, so it's important to choose funds that meet ethical criteria.

• Market Fluctuations: As with all market-based investments, ETFs can be subject to market volatility.

15. Halal Index Funds

Index funds are a type of mutual fund or ETF designed to track the performance of a specific market index, such as the S&P 500. Shariah-compliant index funds exclude stocks from industries like gambling, alcohol, and pork production, ensuring that they meet Islamic investment standards.

Pros:

• Diversification: Index funds provide broad exposure to many stocks, reducing risk.

• Low Fees: These funds typically have lower fees compared to actively managed funds.

• Long-Term Growth: Historically, index funds have delivered steady returns over the long term.

Cons:

• Passive Investment: Index funds are passive, meaning they do not offer the potential for active management or high short-term gains.

• Exposure to Volatility: Index funds are still subject to overall market fluctuations.

16. Islamic Impact Investing

Islamic impact investing refers to investments that aim to generate social or environmental impact alongside a financial return. These investments are aligned with Islamic ethical standards, supporting businesses that contribute positively to society while avoiding industries prohibited by Islamic law.

Pros:

• Ethical and Socially Responsible: Impact investments prioritize social good while also offering potential returns.

• Diversification: These investments allow you to diversify your portfolio while contributing to causes like education, healthcare, and clean energy.

• Shariah-Compliant: Impact investing funds adhere to Islamic principles, ensuring investments are ethical.

Cons:

• Higher Risk: Impact investments often focus on emerging sectors, which can carry higher risk.

• Limited Availability: These types of investments are not as widespread as traditional financial products.

17. Halal REITs (Real Estate Investment Trusts)

Halal Real Estate Investment Trusts (REITs) offer a way to invest in real estate without violating Islamic principles. These REITs focus on properties that are ethically managed, avoiding income from activities like gambling or alcohol sales.

Pros:

• Regular Income: REITs often provide a steady stream of income from rents and property sales.

• Diversification: Investing in real estate through a REIT allows you to diversify without having to purchase property directly.

• Liquidity: REITs are traded on exchanges, making them easier to buy and sell than direct property investments.

Cons:

• Exposure to Market Volatility: Like other market-based investments, REITs are susceptible to fluctuations in property values.

• Management Fees: REITs often charge management fees that can impact overall returns.

Key Takeaway

Exploring halal investment options in the UK for 2025 offers individuals the opportunity to grow wealth while remaining faithful to Islamic principles. From Sukuk bonds to halal ETFs, each investment avenue brings its own set of benefits and challenges. By staying informed and seeking guidance from financial advisors familiar with Shariah-compliant investments, you can make ethical, profitable decisions that align with your values.

Frequently Asked Questions

1. What is a halal investment?

   • A halal investment adheres to Islamic principles, avoiding interest (riba) and industries such as alcohol or gambling.

2. How do halal stocks differ from regular stocks?

   • Halal stocks are carefully selected based on Islamic law, ensuring that the company operates in an ethical and permissible way.

3. Are Islamic bonds (Sukuk) a good investment?

   • Yes, Sukuk are ethical investment options that provide returns through profit-sharing rather than interest.

4. Can Muslims invest in real estate?

   • Yes, Muslims can invest in real estate as long as the transaction follows Islamic guidelines, avoiding interest and unethical practices.

5. What are Shariah-compliant mutual funds?

   • These funds invest in companies that adhere to Islamic principles, excluding those involved in forbidden activities.

6. Are halal ETFs available in the UK?

   • Yes, several halal ETFs are available, offering diversification without exposure to haram industries.

7. How can I invest in halal startups?

   • Platforms like Cur8 Capital allow individuals to invest in startups that comply with Islamic principles.

8. What is the difference between halal and conventional pensions?

   • Halal pensions invest in ethical assets, avoiding industries that are not permissible under Islamic law.

9. Can I invest in gold as a Muslim?

   • Yes, gold is a permissible investment in Islam as long as it is purchased outright without interest or speculative trading.

10. What are halal peer-to-peer lending platforms?

    • These platforms allow investors to lend money to individuals or businesses, avoiding interest payments and adhering to Shariah law.

11. Are halal commodities trading platforms available?

    • Yes, halal commodities trading platforms are available for those wishing to trade ethically in commodities like gold or oil.

12. What is impact investing in Islam?

    • Islamic impact investing focuses on making a positive social or environmental impact while adhering to Shariah principles.

13. Can Muslims invest in REITs?

    • Yes, halal REITs allow Muslims to invest in real estate while ensuring that the properties align with Islamic values.

14. How can I find Shariah-compliant investment opportunities?

    • You can use authorised platforms that specialize in Shariah-compliant investment options. Make sure to do your research before investing in anything.

Discover 7 powerful Islamic investment options for 2025 that can help grow your wealth without compromising your values - check out our latest article to learn more about making your money halal and prosperous.