HYG
Quality Rating
The iShares iBoxx $ Investment Grade Corporate Bond ETF (HYG) is a passive exchange-traded fund that primarily invests in U.S. dollar-denominated investment-grade corporate bonds, generating income through interest payments. This structure inherently involves riba (interest), which is prohibited under Shariah principles, leading to non-compliance across major screening methodologies. Financial ratios are challenging to apply directly due to the ETF's nature, but business activity screening confirms disqualification. No inclusion in Shariah indices reinforces the non-compliant status. Investors seeking fixed-income exposure should consider Shariah-compliant alternatives like sukuk-based funds.
Purification Required
Minimal purification needed for dividend income
Index Inclusion
Not included in any of the four major Shariah-compliant indices: S&P Dow Jones, MSCI Islamic, FTSE Shariah, or Dow Jones Islamic Market.
Key Compliance Considerations
- Core business activity involves riba through investment in interest-bearing corporate bonds (100% revenue exposure)
- Non-compliant income ratio effectively 100%, exceeding 5% threshold across all standards
- Cash and interest-bearing securities ratio approximately 100% of market cap, failing liquidity thresholds
- Exclusion from all major Shariah indices due to prohibited financial sector classification
Debt Ratio
0.0%
Liquidity Ratio
1.0%
Interest Income Ratio
1.0%
Purification
0.00%