Halal Shares Australia (2026): The ASX Names Inside the ISLM ETF, and Why

The most useful free list of halal shares in Australia is not on a screening app; it is in an ASX announcement. On 25 August 2026, Equity Trustees as responsible entity for the Hejaz Equities Fund Active ETF (ASX code ISLM) disclosed the fund's full portfolio at 30 June 2026. Eleven of the thirty holdings are ASX-listed: BlueScope Steel, Wesfarmers, BHP Group, South32, Ventia Services, Rio Tinto, Brambles, Northern Star Resources, ResMed (as CDIs), Fortescue and Origin Energy. Every one of them passed the AAOIFI business and financial-ratio screens that Hejaz Asset Management applies. No bank, insurer or listed property trust appears. This page sets out the list, what it can and cannot tell you, and how a direct share investor should use it.

What ISLM actually is, because the name misleads

ISLM is often described as the Shariah ASX ETF, which overstates the Australian part. The fund page on hejazfs.com.au describes it as an actively managed global equities fund screened to AAOIFI standards, benchmarked for comparison only against the MSCI World Islamic Index hedged into Australian dollars, and listed on the ASX since 17 October 2022. At 31 May 2026 it held A$121.97 million, split 74.3% international equities, 18.2% Australian equities and 7.5% cash; by region, 53.0% United States, 19.7% Australia, 16.0% Europe and 11.3% Hong Kong. The investment manager is Hejaz Asset Management Pty Ltd (AFSL 550009), part of the Hejaz group, and the responsible entity is Equity Trustees Limited (AFSL 240975). The management fee is 1.89% a year with a 20 basis point buy and sell spread each way, no entry, exit or performance fees.

So ISLM is a global fund with an Australian sleeve. That matters for two reasons. If you buy the ETF expecting an ASX portfolio, you are mostly buying US and European technology and industrial names such as Taiwan Semiconductor and Advanced Micro Devices, which were its two largest positions in both the May and June disclosures. And if you use its holdings as a screen, you are reading the Australian sleeve of an active manager's choices, not a full census of every ASX company that passes. The review of the Hejaz halal ETFs covers ISLM as a product; the question here is what its Australian holdings tell a direct investor.

The eleven ASX shares in ISLM at 30 June 2026

The weights below are from the quarterly portfolio disclosure lodged with the ASX on 25 August 2026, covering the portfolio at 30 June 2026. Sector descriptions are ours. Together the eleven names made up roughly 24% of the fund on that date, which is consistent with the fund page's Australian equities figure at the end of May once cash and price moves are allowed for.

The three smallest Australian positions were ResMed CDIs at 0.20%, Fortescue at 0.11% and Origin Energy at 0.07%. ResMed is a US-domiciled medical device company whose ASX line is a CHESS depositary interest, so it passes the same screen but is not an Australian company in the ordinary sense. The tiny Fortescue and Origin weights read like positions being built or sold down; a weight that small says the manager had a view on the price at that moment, not that the company sits on the edge of compliance. On the 31 May fund page, South32 at 3.52% was the only ASX name in the top ten.

Who is not on the list, and the category each falls into

The absences are as informative as the names. None of the four major banks, Macquarie, the listed insurers or the listed property trusts appears. That is expected: AAOIFI's business screen excludes companies whose core activity is lending at interest or conventional insurance, which is what a bank, a general insurer and a life insurer do, and a property trust whose income is permissible can still fail the financial screen if its borrowings are large relative to its market value. The explanation of how AAOIFI screening works for Australian investors sets out both screens; the short version is that the business screen asks what the company does and the ratio screens ask how much interest-bearing debt and interest income it carries relative to its size.

Three exclusion categories cover almost every large ASX name you will not find in a Shariah fund. The first is financial services: banks, insurers, wealth platforms, buy now pay later lenders and consumer credit. The second is prohibited products: alcohol producers and retailers, casinos and wagering operators, pork, conventional tobacco and adult content. The third is balance sheet: companies with permissible businesses that have borrowed heavily, which is where some infrastructure owners, airlines and property trusts fall. A company can move in and out of the third category as its debt and share price move, which is why screens are rerun each quarter and a list dated 30 June 2026 is already ageing.

Why absence from ISLM does not mean a company failed

This is the limit that matters most. ISLM is an active fund holding 30 securities worldwide. Hejaz's manager chooses which compliant companies to own and at what weight, and leaves out compliant companies it does not favour. CSL, Telstra, Woolworths, Coles, Goodman Group and JB Hi-Fi do not appear in the June 2026 list, and this page cannot tell you from that fact alone whether any of them passes or fails an AAOIFI screen. A name on the list is strong evidence of compliance on the disclosure date; a name missing from the list is no evidence either way. To check a missing company you have to run the screen yourself, using the method in the guide to checking whether an ASX share is halal, or use a screening service that publishes its ratios.

There is a second limit: the manager's screen is AAOIFI's, and other standards draw the debt and impermissible income lines in slightly different places. A company that passes AAOIFI can fail a stricter screen and vice versa. If you follow a particular scholar or a particular screening methodology, confirm which standard it uses before adopting this list wholesale.

How to use a fund holdings list as a free screen

• Download the latest ISLM quarterly portfolio disclosure from the ASX announcements page for the ISLM code, and note its date; disclosures are lodged quarterly and lag the quarter end by several weeks.
• Separate the ASX-listed names from the international names, and flag any CDI such as ResMed as a foreign company with an Australian listing.
• Treat every ASX name on the list as having passed AAOIFI screens on the disclosure date, and record that date next to the name in your own list.
• For any company you own or want that is not on the list, run the business and ratio screens yourself or use a service, because absence is not a verdict.
• Re-check your list each time a new disclosure is lodged; a company that drops out may have failed a ratio, been sold on valuation, or been swapped for a competitor, and only the ratios tell you which.
• Keep a note of the impermissible income share for each holding so you can purify dividends; the holdings disclosure does not give this figure, so it comes from the company's own annual report.

Is BHP halal? Is CBA halal? The two questions people type

Is BHP halal?

BHP Group was a 3.47% holding in ISLM at 30 June 2026, and Rio Tinto, South32 and Fortescue were also held, so the four largest ASX miners all passed Hejaz's AAOIFI screen on that date. Mining is a permissible business; the ratio screens are what a miner can fail in a year of heavy borrowing, and a holding in an AAOIFI-screened fund is evidence those ratios were inside the limits at the time. Miners do earn some interest on cash balances, which is why dividend purification still applies.

Is CBA halal?

No Shariah fund in Australia holds Commonwealth Bank, and ISLM does not. A bank's core business is lending and borrowing at interest, so it fails the business screen before any ratio is calculated. The same applies to Westpac, ANZ, NAB and Macquarie. This is the single biggest reason a Shariah-screened Australian portfolio looks different from the index: the banks are among the largest companies on the ASX and all of them are out. The halal stocks hub explains what replaces them.

Dividends, purification and holding the shares the halal way

Passing a screen does not mean a company earns no impermissible income; AAOIFI tolerates a small share, and that share must be given away. The dividend purification guide for Australian portfolios explains how to find the figure and calculate the amount. Holding the shares halal also means the account itself: a CHESS-sponsored account in your own name, paid from settled cash, no margin loan attached, no short selling enabled and no CFD account at the same broker. The verdict on day trading and CFDs covers why each of those matters and what to ask a broker to switch off.

One honest note on the fund itself. The ISLM page reports a total net return of 16.34% for the year to 31 May 2026 against 36.47% for its benchmark, and 11.56% a year since inception against 18.86%. Past returns say nothing about future ones, but the gap is a reminder that an active manager's stock choices are a bet on skill as well as a compliance service. Copying its Australian holdings directly, with no management fee, is one way to use the compliance work without paying for the stock picking, and it also removes the global sleeve if you only wanted ASX exposure.

Who should choose what

A beginner building a first ASX portfolio can take the eleven names above as a verified starting list, buy through a CHESS-sponsored broker from cash, and add names only after screening them. Expect a portfolio heavy in miners and industrials with no banks, and read the guide to investing halal from the ground up before deciding whether direct shares or a fund suits you. Someone checking an existing holding should treat a name on the list as a pass on the disclosure date and a missing name as unanswered, then run the screen or use a service. Anyone who wants global diversification with the screening done for them can buy ISLM itself, accepting the 1.89% fee and the active manager's record. Whichever route you take, note the disclosure date, rerun the check each quarter and purify dividends. Facts checked against hejazfs.com.au, asx.com.au on 5 October 2026.

Frequently asked questions

Which ASX shares are halal right now?

The best-evidenced list is the Australian sleeve of the ISLM ETF, disclosed to the ASX for 30 June 2026: BlueScope Steel, Wesfarmers, BHP, South32, Ventia, Rio Tinto, Brambles, Northern Star, ResMed CDIs, Fortescue and Origin Energy. Each passed AAOIFI screens applied by Hejaz Asset Management on that date. Other ASX companies may also pass; they simply were not held by this fund.

Is ISLM an Australian shares ETF?

No. At 31 May 2026 ISLM was 74.3% international equities, 18.2% Australian equities and 7.5% cash, with 53.0% of the portfolio in the United States. It is an actively managed global fund screened to AAOIFI standards and listed on the ASX, managed by Hejaz Asset Management with Equity Trustees as responsible entity, charging 1.89% a year.

Does a company missing from ISLM fail the Shariah screen?

Not necessarily. ISLM is an active fund of about 30 securities, so its manager leaves out many compliant companies on valuation or preference. Absence tells you nothing; presence tells you the company passed on the disclosure date. For CSL, Telstra, Woolworths or any other missing name, run the business and ratio screens yourself or use a published screening service.

Are the big four banks halal to invest in?

No. Commonwealth Bank, Westpac, ANZ and NAB earn their core income from lending and borrowing at interest, which fails the AAOIFI business screen outright, and none appears in ISLM or any Shariah-screened Australian fund. Macquarie and the listed insurers are excluded for the same reason. Dividends already received from bank shares should be disposed of, not kept.

Do I still need to purify dividends from these shares?

Yes. Passing an AAOIFI screen allows a small share of impermissible income, typically interest on cash balances, and that share of each dividend should be given to charity without expecting reward. The ISLM holdings disclosure does not publish the figure; it comes from each company's annual report, and the dividend purification guide explains the calculation.

How often does the ISLM holdings list change?

The responsible entity lodges a full portfolio disclosure with the ASX each quarter, several weeks after quarter end; the 30 June 2026 portfolio was lodged on 25 August 2026. The fund page also shows top ten holdings and asset splits monthly. Weights move every month, and names can enter or leave for compliance or investment reasons, so date-stamp any list you keep.