StructureScreened public-market investing, not financing. Business-activity exclusions (per Azzad's published guidelines): tobacco, alcohol, pork-related products, gambling, pornography, weapons, and conventional banks/financial-services institutions that derive income from interest-lending and/or gambling; Azzad also will not trade debt-based financial instruments. A company is treated as 'mainly' in an activity if more than 5% of revenue comes from it (AAOIFI SS21, clause 3/4/4). Financial-ratio screens (AAOIFI SS21): interest-bearing debt divided by market capitalisation of shareholders' equity must not exceed 30% (clause 3/4/2; market cap measured as a trailing-12-month average); interest-taking deposits/instruments divided by market cap must not exceed 30% (clause 3/4/3); impermissible income must not exceed 5% of total income; and for tradability, tangible (non-rebawi) assets must be at least 30% of total assets (rules of sarf). Screening is run via Azzad's proprietary ISFA (Investment Screening and Filtering Application).
Audit V2 (methodology-grounded, from Azzad's own published Ethical and Shariah Investment Guidelines). One of the longest-running US halal managers — an SEC-registered adviser, not a debt provider, so the structural lens that troubles home finance does not apply: a shareholder owns a slice of the underlying businesses rather than holding a debt claim, and the analysis turns on the rigour of the screen. Azzad's is public, explicitly built on AAOIFI Shariah Standard 21, and overseen by a named scholarly board. Green on the structural lens; verify the live thresholds and purification figures on the current prospectus before relying on them.
Provider white papers, FAQs or fatāwā were read, but the executed contract itself is not public. This rates our certainty, not the provider’s compliance.
Established & regulatory standing
The verifiable facts
Established
Formed as Zad Asset Management, LLC in Virginia on 4 August 1997; converted to a Delaware corporation as Azzad Asset Management, Inc. in June 2000. Headquartered in Falls Church, Virginia. Adviser to two funds: the Azzad Ethical Fund (ADJEX, launched 2000, mid-cap equities) and the Azzad Wise Capital Fund (WISEX, launched 2010, described as the first halal fixed-income mutual fund in the United States).
Regulatory standing
Investment adviser registered with the SEC under the Investment Advisers Act of 1940; the Azzad Funds are registered under the Investment Company Act of 1940. Verify the live adviser record on the SEC's IAPD/Adviser Info.
Shariah board
Who certifies it
A named Shariah advisory board: Professor Mohamad Mustafa Al Zuhili (PhD, Al-Azhar; former Dean, College of Shariah & Islamic Studies, University of Sharjah; Damascus University), Sheikh Dr. Nazih Hammad (doctorate, Cairo University; former professor, Umm al-Qura University; member of the International Islamic Fiqh Academy and the Islamic Fiqh Council of the Muslim World League), and Dr. Ali Sartawi (PhD, University of Jordan; former Dean of the Faculties of Law and of Shariah at An-Najah; former Palestinian Minister of Justice). The board reviews the zakah and purification calculation methods and rules on matters where there is no AAOIFI precedent.
A named, credentialled board is a real signal — but a provider’s own board certifying its own product is not the same as arm’s-length review. Weigh it alongside the independent commentary below.
Independent scholarly review
What independent scholars have said
No separate independent fatwa body (e.g. an AMJA resolution) on Azzad's funds was located; oversight rests with Azzad's own named Shariah board plus its adoption of AAOIFI Shariah Standard 21.
Independent commentary is weighed, not treated as a final personal ruling. A body that rules one way is one respected voice, not a universal consensus — and rulings can lag changes to a live contract.
How the structure works
The mechanics, in principle
Screened public-market investing, not financing. Business-activity exclusions (per Azzad's published guidelines): tobacco, alcohol, pork-related products, gambling, pornography, weapons, and conventional banks/financial-services institutions that derive income from interest-lending and/or gambling; Azzad also will not trade debt-based financial instruments. A company is treated as 'mainly' in an activity if more than 5% of revenue comes from it (AAOIFI SS21, clause 3/4/4). Financial-ratio screens (AAOIFI SS21): interest-bearing debt divided by market capitalisation of shareholders' equity must not exceed 30% (clause 3/4/2; market cap measured as a trailing-12-month average); interest-taking deposits/instruments divided by market cap must not exceed 30% (clause 3/4/3); impermissible income must not exceed 5% of total income; and for tradability, tangible (non-rebawi) assets must be at least 30% of total assets (rules of sarf). Screening is run via Azzad's proprietary ISFA (Investment Screening and Filtering Application).
This describes the structure in principle — it is not a verdict on the executed contract. How the contract actually behaves is what the checklist below tests.
From the public documents
How the contract actually works
Read from Azzad Asset Management’s own public materials — white papers, product pages, FAQs and fatāwā — not its executed contract, which is generally not published. Where a point is undisclosed, it is said plainly rather than guessed. Sources are listed below.
This is screened public-market investing — no debt contract is sold to the client — so the question is screen integrity and income purification, and Azzad's framework is unusually transparent: it is published in the firm's own Ethical and Shariah Investment Guidelines and tied clause-by-clause to AAOIFI Shariah Standard 21 ('Financial Papers'). Two points are worth weighing honestly. (1) Strictness: Azzad's 30% interest-bearing-debt ceiling is tighter than the 33% used by Saturna's Amana funds, and it is a different basis again from the 49%-of-market-cap screen some index providers (e.g. S&P) apply — so the screens are not directly comparable, and Azzad's is on the conservative end. (2) Purification is handled at the manager level: Azzad states it provides purification-calculation services for the Azzad Funds, updated daily, discloses the methodology to investors, and explicitly disclaims that the figures are estimates rather than the exact impermissible income earned — an honest limitation inherent to all such screens. Honest limits: the guidelines document read here is dated August 2020, so the exact thresholds, the named board members and the screening tool should be reconfirmed against the funds' current prospectus and the live governance page; and the daily purification reports themselves are not public, only the methodology.
The Six-Pillar test
The questions that decide it
This is the universal lens this site applies to every home-finance contract, anywhere. Read each pillar as a question to put to Azzad Asset Management’s executed contract — not its brochure.
- 1
Real ownership
Does the financier genuinely take ownership of the asset — even briefly — and bear a real owner's risk, rather than only ever holding a debt secured against it?
- 2
Risk-sharing
If the asset is destroyed or its value collapses, does the financier share that loss in proportion to its stake, or is the customer left bearing it alone?
- 3
Rent vs interest
In a lease/co-ownership, is the rent benchmarked to a genuine market rent for the property — or is it calibrated to an interest rate (a base-rate + margin) in disguise?
- 4
Default mechanism
On default, does the contract behave like the end of a real lease/partnership — or does it accelerate like a loan, demanding the full outstanding 'principal' plus charges?
- 5
No guaranteed pre-fixed return
Is the financier's return tied to real ownership and risk, or is it a pre-fixed, guaranteed sum that arrives regardless of what happens to the asset?
- 6
Substance over form
Strip away the Arabic labels: does the cashflow, risk, and outcome differ from a conventional loan — or is it the same economics wearing a compliant name (ḥiyal)?
Before you sign
What to ask Azzad Asset Management, in writing
Put these to the provider in writing and keep the answers. The reply — not the marketing — is what tells you whether the structure holds.
Which current prospectus governs the fund I am buying, and do its screens still match the published AAOIFI SS21 thresholds (30% debt, 30% deposits, 5% impure income)?
How is the per-share purification amount calculated, how often is it published, and how do I act on it?
Who currently sits on the Shariah advisory board, and when did it last review the screens?
For the Wise Capital Fund specifically, what instruments (sukuk, murabaha deposits, etc.) make up the portfolio, and how is each screened?
The honest gap
What we have not verified
- The published Ethical and Shariah Investment Guidelines read here are dated August 2020 — reconfirm thresholds, board and tooling against the current prospectus.
- The daily purification calculations are not publicly posted; only the methodology and a disclaimer are.
- No independent (non-Azzad) fatwa on the funds was located; governance rests on Azzad's own board plus AAOIFI SS21.
The reasoning
Why this verdict, and not another
A verdict is only as honest as the reasoning behind it. Here is why Azzad Asset Management sits where it does — what keeps it off a clean pass, and what keeps it off an outright avoid.
Not a clean pass because
It is a clean structural-lens pass (equity ownership, not debt), but the live thresholds, board membership and purification figures rest on a 2020 methodology document plus self-administered purification, so they should be reconfirmed on the current prospectus rather than asserted.
Not an outright avoid because
A long-established SEC-registered adviser with a publicly-documented AAOIFI SS21 screen — conservative on debt (30% vs the common 33%) — a named multi-scholar Shariah board, and disclosed manager-level purification.
Sources
What this read is built on
The verifiable references behind this page — provider documents and independent scholarly resolutions. Read them yourself; do not take our summary on trust.