Is XUS Halal? The 2026 Shariah Verdict for Canadian Muslim Investors

Quick Answer

No — XUS is not halal. XUS is the iShares Core S&P 500 Index ETF, and because it tracks the entire S&P 500 it fails the AAOIFI Shariah screen at the business-activity stage: conventional US banks and insurers — JPMorgan Chase, Bank of America, Wells Fargo, Berkshire Hathaway, Goldman Sachs, and the major insurers — sit near the top of the index by weight, and their revenue is interest-based (riba), which AAOIFI Standard 21 excludes categorically. It also breaches the financial-ratio screens at the portfolio level, with aggregate impermissible income well above the 5% threshold. Purification does not fix this — purification is for incidental non-compliant income in an otherwise halal holding, not for a fund that holds the entire conventional banking sector by design. The compliant alternative is a screened S&P 500 fund: SPUS (0.45% MER) is the closest direct swap, with HLAL (0.49%) and Wealthsimple Halal (~0.4-0.5% all-in) as broader options. The fee premium over XUS's roughly 0.10% MER is real — about $700-$800 per year on a $200K portfolio — but that is the cost of compliance.

Talk to a CFP — free 15-minute call

If you hold XUS and want to rebuild your US-equity exposure on a Shariah-compliant basis that fits your registered accounts, tax bracket, and risk tolerance, book a free 15-minute call with our halal investing specialist team. We run the AAOIFI screen against your actual holdings and map the switch account by account.

What XUS Is — and Why Tracking the S&P 500 Is the Problem

XUS is the iShares Core S&P 500 Index ETF, a Canadian-listed fund that gives Canadian investors exposure to the 500 largest US public companies, priced in Canadian dollars. It comes in two versions — a CAD-hedged version (ticker XUS on some platforms) and an unhedged sibling — but both track the same underlying index: the S&P 500. It is one of the cheapest ways for a Canadian to own US large-cap stocks, with an MER around 0.10%.

That low cost is the whole point of an index tracker, and it is also the root of its Shariah problem. XUS does not select, filter, or screen its holdings for anything. It holds the S&P 500 as the index is constructed — every company, in its index weight. The S&P 500 is a cross-section of the US economy, and the US economy includes conventional banking and insurance as one of its largest sectors. XUS holds all of it, by design.

XUS attribute	Detail
Full name	iShares Core S&P 500 Index ETF
Tracks	S&P 500 (500 largest US companies)
Approx. MER	~0.10%
Shariah screening applied?	None — pure index tracker
Financial-sector holdings	All major US banks & insurers, by index weight

Applying the AAOIFI Screen to XUS: Four Tests, Two Clear Failures

AAOIFI Shari'ah Standard No. 21 is the strictest of the widely cited global Shariah screening benchmarks, and most purpose-built halal ETFs available to Canadians — SPUS, HLAL, and Wealthsimple's screened portfolio — use AAOIFI or near-identical criteria. The screen runs in two stages: a business-activity test first, then three financial-ratio tests.

Stage 1: Business-Activity Screen — XUS Fails

A company fails if more than 5% of its revenue comes from conventional (interest-based) banking and insurance, alcohol, tobacco, gambling, pork, adult entertainment, or weapons. The S&P 500 holds many companies whose entire business model is interest-based finance, and XUS holds every one of them:

Holding	Sector	Why it fails AAOIFI
JPMorgan Chase	Banking	Primary revenue is interest-based lending
Bank of America	Banking	Interest-based lending at scale
Wells Fargo	Banking	Conventional interest-based finance
Goldman Sachs, Morgan Stanley	Investment banking	Interest- and fee-based conventional finance
American Express	Consumer credit	Interest-based lending and card finance
Berkshire Hathaway	Insurance / finance	Major insurance operations + interest-bearing float

The financial sector is consistently one of the largest weights in the S&P 500. Because XUS allocates to the index by weight, conventional banks and insurers make up a substantial slice of the fund — far above the 5% revenue threshold AAOIFI Standard 21 sets for impermissible activity. This is not a marginal compliance issue buried in the fund's tail. The failing names are some of the largest holdings in the entire index.

Stage 2: Financial-Ratio Screens — XUS Also Fails

Even setting the business-activity failures aside, AAOIFI Standard 21 applies three financial-ratio tests to each holding, with no buffer zone:

AAOIFI ratio test	Threshold	XUS status
Interest-bearing debt ÷ market cap	≤ 30%	Fails — many index holdings exceed 30%
Cash + interest-bearing securities ÷ market cap	≤ 30%	Fails — financials, utilities, telecoms breach
Impermissible income ÷ total income	≤ 5%	Fails — financial-sector income far exceeds 5%

Highly leveraged sectors the index contains — utilities, telecoms, and capital-intensive operators — commonly breach the 30% debt-to-market-cap threshold on their own. But the decisive failure is impermissible income: because conventional banks and insurers are a major weight in the S&P 500, the aggregate interest-derived income across XUS's holdings sits well above the 5% line.

The verdict is clear: XUS fails both stages of the AAOIFI Shariah screen. It is not halal under AAOIFI Standard 21, nor under the S&P/DJIM, FTSE Islamic, or MSCI Islamic methodologies — all four exclude conventional financial institutions categorically. Because XUS simply tracks the unscreened S&P 500, there is no interpretation under which it passes.

Why Purification Does Not Fix XUS

Purification is the practice of calculating the small percentage of non-compliant income earned by an otherwise halal holding and donating that amount to charity. It exists because even stocks that pass all four AAOIFI tests may earn trace interest income — the 5% threshold allows near-compliance, and purification cleans the remaining fraction. Under AAOIFI, that purification applies regardless of whether income arrives as dividends.

XUS is not a near-compliant portfolio with a small impurity. It is a broad-market index fund where conventional financials are a large structural weight. Trying to purify that much of your returns is not purification — it is an admission that the investment itself is non-compliant. No mainstream Shariah methodology endorses "purify and hold" for a fund that fails the business-activity screen. The correct action is to sell and replace with a screened holding.

The Compliant Alternatives: What to Buy Instead of XUS

Because XUS is pure US large-cap exposure, the halal swaps map almost one-for-one — and one of them, SPUS, is literally a screened version of the same S&P 500 index. You will pay a higher MER and give up the excluded names, but you get genuine compliance.

Option	Coverage	MER / all-in cost	Annual cost on $200K
SPUS (SP Funds S&P 500 Shariah)	S&P 500, financials & haram sectors excluded	0.45%	$900
HLAL (Wahed FTSE USA Shariah)	Broad US equity, Shariah-screened	0.49%	$980
Wealthsimple Halal (managed)	Global equity, Shariah-screened	~0.4-0.5%	~$800-$1,000
XUS (for comparison)	S&P 500, unscreened	~0.10%	~$200

The fee premium for halal compliance on a US-equity allocation is roughly $700-$800 per year on a $200,000 portfolio. Over 25 years at 6% annual returns, that compounds to approximately $40,000-$55,000 in reduced terminal wealth. That is the honest cost, and it is larger here than for a more expensive base fund precisely because XUS is so cheap to begin with. For a Muslim investor who treats Shariah compliance as a religious obligation, the cost is known and accepted. For someone on the fence, the number should be transparent — not minimized, not inflated.

SPUS is the closest drop-in

If your entire reason for holding XUS was S&P 500 exposure, SPUS is the most natural replacement: it tracks the S&P 500 universe with the conventional financials and other non-compliant sectors stripped out, so the remaining names skew toward technology, healthcare, consumer, and industrials. You lose roughly the financial-sector slice and gain a clean screen. HLAL gives broader US-equity coverage screened against FTSE Islamic criteria, and Wealthsimple Halal is the hands-off managed route if you would rather not select funds yourself.

How to Switch from XUS to a Halal Portfolio — Account by Account

The tax consequence of selling XUS depends entirely on which account type holds it:

RRSP: sell and rebuy, zero tax

Inside an RRSP, selling XUS triggers no capital gains tax — the account is tax-deferred, so you can sell the full position today and buy SPUS or HLAL, or transfer to Wealthsimple Halal, with no tax event. This is the cleanest switch, and there is no reason to delay it. The 2026 RRSP contribution limit is $33,810 (or 18% of prior-year earned income, whichever is lower), and any new contributions should go straight into the halal replacement.

TFSA: same — sell and rebuy, zero tax

The TFSA works identically. No tax on gains inside the account. Sell XUS, buy the screened fund, done. The 2026 TFSA annual limit is $7,000, with cumulative lifetime room of $109,000 for anyone eligible since 2009.

Non-registered: one-time capital gains tax on the switch

Selling XUS in a taxable account triggers capital gains tax at the 50% inclusion rate on any accrued gain. On a $100,000 position with $30,000 of embedded gains, the taxable amount is $15,000 (50% of $30,000), and the tax owed depends on your marginal rate. At Ontario's top combined rate of 53.53%, that is roughly $8,000; at Alberta's 48% top rate, roughly $7,200. It is a one-time cost, not an annual drag — and the longer you wait, the larger the embedded gain grows. Switch the registered accounts first (zero tax), then handle the non-registered account when you are ready to absorb the one-time hit.

What About VFV, ZSP, and the Rest of the S&P 500 Family?

If you are wondering whether a different S&P 500 ETF might somehow pass, the answer is no — they all track the same index:

VFV (Vanguard S&P 500 Index ETF): identical S&P 500 holdings, including every major US bank and insurer. Not halal.
ZSP (BMO S&P 500 Index ETF): same index, same financial-sector holdings, same verdict. Not halal.
VOO / VFV-equivalents: any fund tracking the unscreened S&P 500 fails for the same structural reason. Not halal.
XEQT, VEQT (all-equity asset-allocation funds): hold the S&P 500 inside their US sleeve plus the conventional-bank-heavy TSX, so they fail on the same grounds. Not halal.

The only US-equity funds that reliably pass Shariah screening are the ones explicitly built for it — SPUS, HLAL, and similar purpose-built halal funds. An index tracker holds the economy as it is, and the US economy runs on interest-based finance at scale. For a broader walk through the screened funds available to Canadians, see our guide to halal ETFs in Canada.

Zakat on Your Halal US-Equity Holding — A Quick Framework

Once you switch from XUS to a screened fund, zakat applies at 2.5% annually on the zakatable balance. The two main scholarly views on registered accounts:

Gross balance view: 2.5% on the full market value. On a $200K RRSP, that is $5,000 per year.
Net accessible view (common among North American scholars): 2.5% on the after-tax withdrawable amount. Assuming a 40% future tax rate, the zakatable base on a $200K RRSP is $120K, and the zakat is $3,000 per year.

Zakat should be paid in cash from outside the RRSP — withdrawing from the RRSP to pay it triggers immediate tax and permanently destroys contribution room. Budget it as an annual line item paid from your TFSA, non-registered savings, or employment income.

The Honest Bottom Line

XUS is an excellent product for what it is built to do — cheap, simple S&P 500 exposure in Canadian dollars. It is not built for Shariah compliance, and it does not achieve it. The failing holdings are not obscure names hidden deep in the fund; they are the largest US banks and insurers, sitting near the top of the S&P 500 by weight.

Switching to a halal US-equity fund costs more in fees, removes the excluded financial-sector names, and asks you to make active decisions about zakat and purification that XUS investors never think about. Those are real costs. They are also the costs of investing in alignment with your values, and for a Muslim investor who takes Shariah compliance seriously, they are not optional.

The mechanics of the switch are straightforward: sell XUS inside your RRSP and TFSA (zero tax), buy SPUS or HLAL, or transfer to Wealthsimple Halal, and handle the non-registered account when you are ready for the one-time capital gains hit. This article applies the AAOIFI screen as a financial-planning tool; on a personal religious ruling, confirm the verdict with a qualified Shariah scholar before you act.

Need help making the switch?

If you hold XUS across multiple accounts and want a step-by-step plan for converting to a Shariah-compliant US-equity portfolio — including the tax math on your non-registered holdings, the zakat calculation, and the right halal ETF mix for your risk profile — book a free 15-minute call with our halal investing team. We do this daily.

Disclaimer: This article applies the AAOIFI Shariah Standard No. 21 screening methodology to publicly reported fund holdings. Shariah-compliance rulings involve scholarly interpretation — for a binding ruling on your specific situation, consult a qualified Islamic finance scholar. Fund holdings and financial ratios change quarterly; verify current data via Musaffa or Zoya before acting. This is not a fatwa.

Key Takeaways

1XUS is not halal — it tracks the full S&P 500 and fails the AAOIFI business-activity screen because conventional US banks and insurers (interest-based revenue, or riba) are a large structural weight in the index
2The specific failing holdings include JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, American Express, and Berkshire Hathaway — all near the top of the S&P 500 by weight
3XUS, VFV, and ZSP all track the identical S&P 500 index, so all three fail for the same structural reason — the choice between them is a fee-and-currency decision, not a compliance one
4Purification does not fix XUS — purification applies to incidental non-compliant income under 5%, not to a fund that holds the entire financial sector by design
5The closest halal swap is SPUS (0.45% MER, screened S&P 500), with HLAL (0.49%) and Wealthsimple Halal (~0.4-0.5%) as alternatives — the fee premium over XUS's ~0.10% is roughly $700-$800 per year on $200K

Frequently Asked Questions

Q:What does XUS actually hold, and why does it matter for Shariah screening?

A:XUS is the iShares Core S&P 500 Index ETF, a Canadian-listed fund that gives Canadian investors S&P 500 exposure in Canadian dollars. It holds the full 500-company S&P 500 index — which means it tracks the entire large-cap US economy, conventional banks and insurers included. The financial sector is one of the largest weights in the S&P 500, and XUS holds every name in it: JPMorgan Chase, Bank of America, Wells Fargo, Berkshire Hathaway, Goldman Sachs, Morgan Stanley, American Express, and the major US insurers. None of these are filtered out, because XUS makes no attempt to screen for Shariah compliance. It is a pure index tracker. That structural fact — it holds the whole index by design — is exactly why it fails the AAOIFI business-activity screen. There is no version of the unscreened S&P 500 that excludes conventional finance.

Q:What is the AAOIFI Shariah screen that XUS fails?

A:AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shari'ah Standard No. 21 is the most widely cited global benchmark for whether a stock or fund is halal. It has two stages. Stage one is the business-activity screen: a company fails if more than 5% of its revenue comes from conventional interest-based finance and insurance, alcohol, tobacco, gambling, pork, adult entertainment, or weapons. Stage two applies three financial-ratio tests — interest-bearing debt must be 30% or less of market capitalization, cash plus interest-bearing securities must be 30% or less of market cap, and impermissible income must be 5% or less of total income. A holding must pass all four tests to be Shariah-compliant. XUS fails at stage one because it holds conventional banks and insurers whose entire revenue base is interest-derived, and it fails the financial-ratio tests at the portfolio level because the aggregate impermissible income of its 500 holdings far exceeds 5%.

Q:How is XUS different from buying the S&P 500 directly or holding VFV or ZSP?

A:It isn't different in any way that matters for Shariah compliance. XUS, VFV (Vanguard S&P 500 Index ETF), ZSP (BMO S&P 500 Index ETF), and a US-listed fund like VOO all track the same S&P 500 index. They differ on MER, currency hedging, and which fund family issues them — XUS comes in a CAD-hedged version and an unhedged version — but they hold the identical 500 companies in the identical weights. If the index fails the AAOIFI screen, every ETF that tracks it fails too. The choice between XUS, VFV, and ZSP is a fee-and-currency decision for conventional investors; for a Muslim investor screening for halal compliance, all three are non-starters for the same reason.

Q:Can I just purify XUS's non-compliant income instead of selling it?

A:No. Purification is designed for a holding that passes all four AAOIFI screens but still earns a small slice of incidental non-compliant income — the 5% threshold permits near-compliance, and the investor donates the trace impermissible portion to charity. XUS is not a near-compliant fund with a minor impurity. Conventional banks, insurers, and other interest-based financials are a large structural weight in the S&P 500, and that income is the core of those businesses, not an incidental margin. You cannot purify away a sector that the fund holds by design. Scholars are consistent on this: purification cleans the edges of an otherwise compliant portfolio, it does not rehabilitate one that fails the business-activity screen. The correct step is to sell XUS and replace it with a purpose-built Shariah-screened fund.

Q:What are the best halal alternatives to XUS for US equity exposure?

A:Because XUS is pure US large-cap exposure, the halal replacements line up almost one-for-one. SPUS (SP Funds S&P 500 Shariah Industry Exclusions ETF, 0.45% MER) tracks an S&P 500 universe with the non-compliant sectors stripped out — it is the closest direct analogue to XUS. HLAL (Wahed FTSE USA Shariah ETF, 0.49% MER) is a broader US-equity halal fund screened against FTSE Islamic criteria. Wealthsimple's Shariah-screened halal portfolio (roughly 0.4-0.5% all-in) is the managed option if you prefer not to pick funds yourself. For a Canadian investor whose entire goal with XUS was the S&P 500, SPUS is the most natural swap — same index family, screened. The trade-off is a higher MER than XUS's roughly 0.10% and the loss of the few excluded names, but you get genuine Shariah compliance instead of a fund that holds the entire conventional banking sector.

Q:How much more does a halal US-equity ETF cost than XUS in fees?

A:XUS is extremely cheap — its MER is roughly 0.10%, one of the lowest S&P 500 trackers available to Canadians. The halal alternatives cost more: SPUS charges 0.45%, HLAL charges 0.49%, and Wealthsimple's halal portfolio runs roughly 0.4-0.5% all-in. On a $200,000 portfolio, that fee gap is approximately $700-$800 more per year for the screened fund versus XUS. Over 25 years at 6% annual returns, the difference compounds into roughly $40,000-$55,000 of reduced terminal wealth — meaningful, and worth stating plainly rather than minimizing. For a Muslim investor who treats Shariah compliance as a religious obligation, that premium is the cost of alignment, not a reason to compromise. As halal ETF assets grow and competition increases, the gap may narrow, but in 2026 it is real.

Q:Do the major halal screening apps flag XUS as non-compliant?

A:Yes. Musaffa and Zoya — the two most widely used halal stock-screening platforms among North American Muslim investors — both flag S&P 500 index funds as non-compliant. These apps screen the underlying holdings of an ETF against AAOIFI or near-equivalent criteria and report the percentage of the portfolio that fails. For an unscreened S&P 500 tracker like XUS, the non-compliant percentage typically lands in the 30-40% range once you include conventional financials, alcohol and tobacco producers, gambling operators, and defence contractors across the index. The exact figure varies slightly because Musaffa and Zoya use different financial-ratio denominators, but both reach the same verdict: a fund that tracks the full S&P 500 is not halal.

Q:If I hold XUS in my RRSP or TFSA, how do I switch to a halal portfolio without a tax hit?

A:Selling XUS inside an RRSP or TFSA triggers no tax at all — both are registered accounts where gains are sheltered, so you can sell the entire position and buy SPUS, HLAL, or transfer to Wealthsimple Halal with no capital gains event. That is the clean switch, and there is no reason to delay it. The only place tax matters is a non-registered (taxable) account: selling XUS there triggers capital gains tax at the 50% inclusion rate on the accrued gain. On a $100,000 non-registered XUS position with $30,000 of embedded gains, the taxable amount is $15,000 (50% of $30,000), and at Ontario's top combined rate of 53.53% the tax is roughly $8,000. That is a one-time cost of compliance, not an annual drag. Switch the registered accounts first — zero tax — and handle the non-registered account when you are ready to absorb the one-time gain.

Question: What does XUS actually hold, and why does it matter for Shariah screening?

Answer: XUS is the iShares Core S&P 500 Index ETF, a Canadian-listed fund that gives Canadian investors S&P 500 exposure in Canadian dollars. It holds the full 500-company S&P 500 index — which means it tracks the entire large-cap US economy, conventional banks and insurers included. The financial sector is one of the largest weights in the S&P 500, and XUS holds every name in it: JPMorgan Chase, Bank of America, Wells Fargo, Berkshire Hathaway, Goldman Sachs, Morgan Stanley, American Express, and the major US insurers. None of these are filtered out, because XUS makes no attempt to screen for Shariah compliance. It is a pure index tracker. That structural fact — it holds the whole index by design — is exactly why it fails the AAOIFI business-activity screen. There is no version of the unscreened S&P 500 that excludes conventional finance.

Question: What is the AAOIFI Shariah screen that XUS fails?

Answer: AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shari'ah Standard No. 21 is the most widely cited global benchmark for whether a stock or fund is halal. It has two stages. Stage one is the business-activity screen: a company fails if more than 5% of its revenue comes from conventional interest-based finance and insurance, alcohol, tobacco, gambling, pork, adult entertainment, or weapons. Stage two applies three financial-ratio tests — interest-bearing debt must be 30% or less of market capitalization, cash plus interest-bearing securities must be 30% or less of market cap, and impermissible income must be 5% or less of total income. A holding must pass all four tests to be Shariah-compliant. XUS fails at stage one because it holds conventional banks and insurers whose entire revenue base is interest-derived, and it fails the financial-ratio tests at the portfolio level because the aggregate impermissible income of its 500 holdings far exceeds 5%.

Question: How is XUS different from buying the S&P 500 directly or holding VFV or ZSP?

Answer: It isn't different in any way that matters for Shariah compliance. XUS, VFV (Vanguard S&P 500 Index ETF), ZSP (BMO S&P 500 Index ETF), and a US-listed fund like VOO all track the same S&P 500 index. They differ on MER, currency hedging, and which fund family issues them — XUS comes in a CAD-hedged version and an unhedged version — but they hold the identical 500 companies in the identical weights. If the index fails the AAOIFI screen, every ETF that tracks it fails too. The choice between XUS, VFV, and ZSP is a fee-and-currency decision for conventional investors; for a Muslim investor screening for halal compliance, all three are non-starters for the same reason.

Question: Can I just purify XUS's non-compliant income instead of selling it?

Answer: No. Purification is designed for a holding that passes all four AAOIFI screens but still earns a small slice of incidental non-compliant income — the 5% threshold permits near-compliance, and the investor donates the trace impermissible portion to charity. XUS is not a near-compliant fund with a minor impurity. Conventional banks, insurers, and other interest-based financials are a large structural weight in the S&P 500, and that income is the core of those businesses, not an incidental margin. You cannot purify away a sector that the fund holds by design. Scholars are consistent on this: purification cleans the edges of an otherwise compliant portfolio, it does not rehabilitate one that fails the business-activity screen. The correct step is to sell XUS and replace it with a purpose-built Shariah-screened fund.

Question: What are the best halal alternatives to XUS for US equity exposure?

Answer: Because XUS is pure US large-cap exposure, the halal replacements line up almost one-for-one. SPUS (SP Funds S&P 500 Shariah Industry Exclusions ETF, 0.45% MER) tracks an S&P 500 universe with the non-compliant sectors stripped out — it is the closest direct analogue to XUS. HLAL (Wahed FTSE USA Shariah ETF, 0.49% MER) is a broader US-equity halal fund screened against FTSE Islamic criteria. Wealthsimple's Shariah-screened halal portfolio (roughly 0.4-0.5% all-in) is the managed option if you prefer not to pick funds yourself. For a Canadian investor whose entire goal with XUS was the S&P 500, SPUS is the most natural swap — same index family, screened. The trade-off is a higher MER than XUS's roughly 0.10% and the loss of the few excluded names, but you get genuine Shariah compliance instead of a fund that holds the entire conventional banking sector.

Question: How much more does a halal US-equity ETF cost than XUS in fees?

Answer: XUS is extremely cheap — its MER is roughly 0.10%, one of the lowest S&P 500 trackers available to Canadians. The halal alternatives cost more: SPUS charges 0.45%, HLAL charges 0.49%, and Wealthsimple's halal portfolio runs roughly 0.4-0.5% all-in. On a $200,000 portfolio, that fee gap is approximately $700-$800 more per year for the screened fund versus XUS. Over 25 years at 6% annual returns, the difference compounds into roughly $40,000-$55,000 of reduced terminal wealth — meaningful, and worth stating plainly rather than minimizing. For a Muslim investor who treats Shariah compliance as a religious obligation, that premium is the cost of alignment, not a reason to compromise. As halal ETF assets grow and competition increases, the gap may narrow, but in 2026 it is real.

Question: Do the major halal screening apps flag XUS as non-compliant?

Answer: Yes. Musaffa and Zoya — the two most widely used halal stock-screening platforms among North American Muslim investors — both flag S&P 500 index funds as non-compliant. These apps screen the underlying holdings of an ETF against AAOIFI or near-equivalent criteria and report the percentage of the portfolio that fails. For an unscreened S&P 500 tracker like XUS, the non-compliant percentage typically lands in the 30-40% range once you include conventional financials, alcohol and tobacco producers, gambling operators, and defence contractors across the index. The exact figure varies slightly because Musaffa and Zoya use different financial-ratio denominators, but both reach the same verdict: a fund that tracks the full S&P 500 is not halal.

Question: If I hold XUS in my RRSP or TFSA, how do I switch to a halal portfolio without a tax hit?

Answer: Selling XUS inside an RRSP or TFSA triggers no tax at all — both are registered accounts where gains are sheltered, so you can sell the entire position and buy SPUS, HLAL, or transfer to Wealthsimple Halal with no capital gains event. That is the clean switch, and there is no reason to delay it. The only place tax matters is a non-registered (taxable) account: selling XUS there triggers capital gains tax at the 50% inclusion rate on the accrued gain. On a $100,000 non-registered XUS position with $30,000 of embedded gains, the taxable amount is $15,000 (50% of $30,000), and at Ontario's top combined rate of 53.53% the tax is roughly $8,000. That is a one-time cost of compliance, not an annual drag. Switch the registered accounts first — zero tax — and handle the non-registered account when you are ready to absorb the one-time gain.