What England Can Teach Us About Sharia Mutual Funds
In one of the world's most Christian-majority nations, Islamic finance has gone mainstream. Here's why that should change the way you think about investing.
Here’s a fact that surprises most people.
The United Kingdom, where about 46% of the population identifies as Christian and only 6.5% as Muslim, is the leading hub for Islamic finance in the Western world.
And it didn’t happen because of religion.
The UK’s Islamic finance sector is worth over £6 billion. In 2014, the UK government issued the Western world’s first sovereign Sukuk (Islamic bond). Today, the London Stock Exchange has hosted more than $50 billion in Sukuk listings.
Even retail investors are participating.
The NEST Sharia Fund, available to any UK pension saver regardless of faith, had attracted over £180 million by 2024.
Most of those investors were looking for exposure to technology, healthcare, and other productive sectors with an ethical framework.
So what is a Sharia mutual fund?
In simple terms, it’s a professionally managed fund that follows a few key principles. These typically include:
No interest-based income
Certain sectors are excluded (such as alcohol, tobacco, gambling, weapons, and adult entertainment)
No excessive speculation
Investments must be backed by real business activity
Each fund is also reviewed by a Sharia Supervisory Board to ensure it remains compliant.
What does that leave in the portfolio?
In practice, many holdings end up overlapping with ESG-aligned companies — businesses that emphasize responsible governance, sustainable growth, and long-term value creation.
You don’t have to be Muslim to invest
This is an important point: Sharia funds are inclusive investment products, not exclusive to Muslim investors.
Even NEST, one of the UK’s largest pension providers, states clearly:
“Anyone can invest in this fund, you don’t have to be Muslim.”
In practice, many investors choose these funds for the same reason they choose ESG investing. They want their money aligned with certain principles.
Why investors pay attention
Sharia funds exclude highly leveraged companies and speculative sectors.
That often means portfolios tilted toward businesses with strong balance sheets and real economic activity.
According to Refinitiv (2024), Islamic funds have often matched or outperformed conventional funds, partly because they avoided banking stocks that were hit hardest during past crises.
England has already embraced it. Perhaps it’s time more investors take a closer look.