The Wahed Dow Jones Islamic World ETF (UMMA) seeks to track the Dow Jones Islamic Market World Index, which measures the performance of global stocks that comply with Islamic investment principles (Shariah law). This international equity ETF excludes companies involved in alcohol, tobacco, gambling, conventional banking, and other prohibited activities while maintaining diversified exposure across developed and emerging markets.
How It Works
UMMA uses a passively managed, market-capitalization-weighted approach that mirrors its Shariah-compliant benchmark index. The fund holds only stocks that pass Islamic screening criteria, including debt-to-market-cap ratios below 33% and revenue restrictions from prohibited business activities. Holdings are rebalanced quarterly to maintain compliance with religious guidelines and index composition. The ETF provides global equity exposure while adhering to Islamic investment principles through systematic exclusion of non-compliant sectors and companies.
Key Features
- Only ETF offering broad global Shariah-compliant equity exposure, serving Muslim investors seeking religious adherence without geographic restrictions
- Systematic screening process excludes entire sectors like conventional banking, alcohol, and gambling while maintaining diversified international exposure
- Zero expense ratio makes it cost-competitive with conventional broad market ETFs while providing specialized religious compliance screening
Risks
- This ETF can lose value when global equity markets decline, with potential 30-50% drops during severe bear markets affecting international stocks
- Shariah screening significantly reduces investment universe, potentially missing high-performing sectors like conventional financials and creating concentration risk in compliant industries
- Currency fluctuations from international holdings can amplify volatility, as foreign stock returns get translated back to U.S. dollars for American investors
Who Should Own This
Best suited for Muslim investors with 5+ year time horizons seeking Shariah-compliant global equity exposure as a core holding (30-60% of equity allocation). Medium-to-high risk tolerance required due to international equity volatility and sector concentration from religious screening. Works well for investors prioritizing religious compliance over maximum diversification in retirement or taxable accounts.