• Broader diversification combining developed and emerging markets gives rise to demand
  • ETFs offer ease of access to investors looking for Shariah-compliant exposure

Dubai, UAE: Invesco expects further acceleration in demand for Shariah-compliant investment vehicles that offer investors ethically suitable tools for creating diversified portfolios, particularly given an expanding range of passive products for global equity exposures.   

“Islamic finance has evolved significantly since it was established five decades ago, but growth has only started to accelerate in recent years as investors are able to access cost-efficient exposure through UCITS ETFs that offer Shariah compliance,” said Josette Rizk, Head of Middle East and Africa at Invesco. “As investors around the world have started to factor sustainable considerations in their investment solutions, we have seen a rising demand for Shariah-compliant investment products, which by their nature align with responsible, social and ethical values.”

ETFs domiciled in EMEA registered their best-ever year in 2025, gathering more than $373 billion in total net new assets (NNA). Momentum has continued into 2026 despite an increase in market volatility, with a further $53 billion in NNA in January taking total assets under management to over $3.3 trillion.  Dr. Chris Mellor, Head of EMEA ETF Equity Product Management, said: “ETFs are reputed for being simple, relatively cost-effective and efficient investment vehicles to gain exposure to a diverse range of investments, which drives much investor appeal.  Beyond these favored characteristics, we can attribute the incredible demand that we saw in 2025 to strong stock market performance and investors seeking opportunities to diversify their holdings. While the broad global equity category captured the largest share of net inflows in the year, those ETFs that combine companies from both developed and emerging markets saw a steady surge in demand, particularly from individual investors seeking the broadest diversification through one simple product. Most of these ‘all world’ UCITS ETFs are passively managed, tracking benchmarks from major index providers such as MSCI and FTSE.”

“While the European ETF market has grown rapidly over the past decade, the choice for Shariah investors has remained limited,” said Dr. Mellor.  “Investors currently have around 10 suitable equity UCITS ETFs from which to choose, and only three of those offer global exposure to developed markets but none offer the combination of developed and emerging markets.  Shariah investors wanting an all-world exposure would need to invest in the different regions separately and manage the allocation themselves, which can be cumbersome and inefficient.  We believe the ETF market should evolve to offer Shariah investors a simpler and more cost-efficient means for gaining all-world equity exposure.”

MSCI and S&P Dow Jones have both created indices that meet the standards of Shariah compliance focused on sector, asset class, region, or size. The Dow Jones Islamic Market World Index was the world’s first Shariah-compliant benchmark, launched in 1999. This index is tracked by the largest Islamic ETF in EMEA, which has $1.1 billion in assets under management, just over a third of all equity assets in Islamic UCITS ETFs.  Since then, MSCI has launched a series of indices that adhere to the Shariah guidelines including the MSCI ACWI Islamic M-Series Index offering exposure to companies from developed and emerging market economies across the world. MSCI applies business involvement and financial ratio screens to ensure compliance with Shariah investment principles, with oversight provided by an independent Shariah committee. 

“Investors are seeking simple and cost- efficient investments that align with their sustainability preferences and values, ,” added Josette Rizk.  “It is an exciting development as index providers launch indices that provide ease of access to global markets.”

About Invesco

Invesco Ltd. is one of the world’s leading asset management firms with over 8,300 employees helping clients in more than 120 countries. With US$2.2 trillion in assets under management as of 31 December 2025, we deliver a comprehensive range of active, passive and alternative investment capabilities. Our collaborative mindset, breadth of solutions and global scale mean we're well positioned to help retail and institutional investors rethink challenges and find new possibilities for success. For more information, visit www.invesco.com.  

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