The ETFs

In investing, you can't build a plan if you don't have a rough idea of what returns to expect - and, just as importantly, how different assets move together.

Wall Street banks have "cheat sheets" called Capital Market Assumptions. These documents contain expected returns, volatility estimates, and correlation matrices that inform how they build portfolios for wealthy clients. But those documents are hard to find. They're written for institutional audiences. And they almost never include Shariah-compliant options.

I wanted to create a version of that cheat sheet for us. Using the halal ETFs available in Canada. So we can plan for Hajj, for a home, for retirement - with our eyes open. Not just hoping for the best.

This page covers the individual ETFs - what they hold, their expected returns, and their volatility. For how these assets interact with each other (correlations), see How They Move Together. For the mathematical formulas behind portfolio optimization, see Portfolio Calculations.

Understanding the Numbers

Before we look at specific ETFs, you need to understand two concepts that drive everything: Expected Return and Volatility.

What Is "Expected Return"?

When you see a number like "7% expected return," it does not mean you will get 7% next year. It does not mean you will get 7% in any particular year.

Where do these numbers come from? I calculated them using data from major institutions like Morgan Stanley, BlackRock, and AQR Capital. I also used standard economic formulas (like the Capital Asset Pricing Model) and current market data.

What do they mean? They are a "best guess" for what the market might average over the next 10 to 20 years. Think of it as a planning assumption, not a prediction.

The risk: Next year, the market could drop 30%. Or it could surge 25%. These numbers are tools for thinking about the future. They are not crystal balls. The actual path will be far bumpier than any smooth average suggests.

What Is "Volatility"?

Volatility measures how much an investment's price swings up and down. It's expressed as a percentage - technically, the standard deviation of annual returns.

Low volatility (5%) means the price is fairly stable. It doesn't jump around much. You can sleep at night.

High volatility (70%) means wild swings. The price could double or get cut in half in a single year. You might not sleep at night.

Think of it like two roads that can get you to the same destination. One is a smooth highway. One is a mountain pass with hairpin turns and sheer cliffs. Volatility tells you how bumpy the ride will be - and whether you have the stomach for it.

Why Volatility? Why Not Something Else?

If you're going to quantify expected return, you have to quantify risk. That's harder — but necessary.

We use standard deviation (volatility) because it captures the choppiness of the journey, not just the worst-case outcome. Max drawdown tells you the deepest hole you might fall into. Volatility tells you how rocky the road feels the whole way.

High returns come with a price: more turbulence. Standard deviation makes that price visible.

Why Use These Numbers If They're Uncertain?

Expected returns and volatility are estimates. They come from historical data, economic models, and institutional forecasts — all of which carry uncertainty. The data is noisy. The future is unknowable.

So why include them at all?

Because you need some measure to compare options. Without numbers, you're flying blind — choosing between ETFs based on vibes. These estimates give you a structured way to think about tradeoffs, even if the precision is imperfect.

The math behind portfolio theory is sound. The inputs are noisy. We're making the best decision we can with the best tools available — tools that, historically, have served long-term investors well. But they are not guarantees.

The ETFs

Here's the breakdown of each ETF used in HalalFolio, grouped by asset class. For each one, I'll explain not just the numbers, but why those numbers make sense given the underlying assets.

U.S. Large-Cap Equities

These funds hold Shariah-compliant U.S. stocks - the largest, most established American companies. Think Apple, Microsoft, Johnson & Johnson. The engines of the world's largest economy.

Why 7%? The long-run historical average for U.S. stocks is about 10% per year. But history is not destiny. Current valuations are elevated - price-to-earnings ratios sit well above historical norms. Most major forecasters, including Morgan Stanley, project 5-6% for U.S. large-caps over the next 7 years. I use 7% as a slightly optimistic estimate within that range.

Why 15% volatility? This is roughly the historical standard deviation of the S&P 500. In practical terms, it means in a typical year, returns could reasonably fall anywhere from -8% to +22%. In bad years - 2008, 2022 - it's far worse. In exceptional years, it's far better. The 15% figure captures the average bumpiness.

Qualitative differences between these funds:

• SPUS tracks the S&P 500 with a pure Shariah screen - it applies the standard Islamic finance exclusions (no conventional financials, alcohol, gambling, pork, weapons, etc.) to the S&P 500 universe.
• HLAL tracks the FTSE USA Shariah Index, which uses similar screening criteria but a different index methodology. The holdings are nearly identical in practice.
• MNZL is notable for adding BDS (Boycott, Divestment, Sanctions) screening on top of Shariah compliance. It excludes companies on the BDS list for their involvement in Israeli settlements. For investors who care about Palestinian solidarity in their investments, this is a meaningful distinction.

All three funds hold virtually the same basket of large-cap U.S. stocks and will move almost identically. S&P Global has found that "Shariah indices tend to be highly correlated to their conventional counterparts." The correlation between these three is approximately 0.99 - from a diversification standpoint, they're interchangeable. Investors typically choose between them based on fees, platform availability, or the BDS screening preference.

Global Developed Equities (Low-Volatility)

WSHR takes a different approach. Instead of simply tracking a market-cap-weighted index, it applies a "low-volatility" screen - selecting stocks that have historically been less volatile and excluding highly leveraged companies.

Why similar expected return but lower volatility? This defensive tilt is a deliberate tradeoff. In roaring bull markets, low-volatility stocks tend to underperform their high-flying counterparts. But the strategy aims to deliver near-market returns with significantly less risk.

Why only 12% volatility? That's precisely the point. WSHR is designed to give you approximately 80% of the market return with about 80% of the volatility. If it works as intended, you get a smoother ride - fewer sleepless nights, smaller drawdowns during corrections - while still participating in long-term growth.

Global Equities (Ex-U.S.)

These funds hold international stocks outside the United States: Europe, Japan, Canada, Australia, and emerging markets like India and Brazil.

Why 8%? Valuations outside the U.S. are generally lower. Non-U.S. stocks trade at cheaper price-to-earnings multiples, which historically has been a tailwind for future returns. Morgan Stanley's 2025 outlook projects global ex-U.S. equity returns higher than U.S. equities over the coming decade. Emerging markets carry extra risk - political instability, currency fluctuations, less developed institutions - but also higher potential reward.

Why 16% volatility? Emerging markets alone are more volatile (around 20%). But these funds blend emerging markets with developed international markets, bringing the overall volatility down to the mid-teens - roughly comparable to U.S. equities.

Qualitative differences:

• SPWO focuses on developed international markets (ex-U.S.) - primarily Europe, Japan, Canada, and Australia.
• UMMA tracks the broader Dow Jones Islamic Market World Index, which includes both U.S. and international stocks. Despite the name, it has significant U.S. exposure.

Both funds provide geographic diversification, though the benefit is more modest than many investors expect. Morningstar has noted that correlations between U.S. and developed international markets "have remained high."

Technology Sector

Technology stocks have been the growth engine of recent markets - and the source of some of its most spectacular crashes.

Why higher return and higher risk? Tech stocks have higher "beta," meaning they amplify market movements. When markets rise, tech often rises more. When markets fall, tech often falls harder. We saw this vividly in 2022, when the NASDAQ-100 dropped over 30% while the broader market fell around 20%.

Why 20% volatility? The NASDAQ-100 has historically experienced 18-22% annual volatility. Tech is a high-conviction bet: potentially higher returns, but with a materially bumpier ride.

A note on overlap: Shariah-compliant U.S. indices already overweight technology because they exclude financials. HLAL and SPUS have significant tech exposure built in. Adding SPTE on top means you're making a concentrated bet on one sector. That's not inherently wrong - but you should understand that you're amplifying tech exposure, not diversifying away from it.

Real Estate (REITs)

Real Estate Investment Trusts (REITs) own income-producing properties - office buildings, shopping centers, apartment complexes. They're required to distribute most of their income as dividends, which makes them appealing to income-seeking investors.

Why 6%? Higher interest rates are a headwind for REITs. When bond yields rise, REITs become relatively less attractive (investors can earn yield elsewhere with less risk). BlackRock's investment institute projects global REIT returns in the 5-7% range over the coming decade. I use 6%.

Why 14% volatility? Despite their steady rental income, REITs are publicly traded stocks. They experience significant price swings during market corrections. The Shariah screen excludes the most heavily indebted REITs, potentially reducing some risk - but REITs remain volatile assets.

Sukuk (Islamic Bonds)

Sukuk are the Islamic equivalent of bonds. They're structured to pay profit or rent instead of interest, but economically, they behave much like investment-grade conventional bonds.

Why 4%? This essentially matches the current yield available in the sukuk market. U.S. 10-year Treasury yields hover around 4%. High-quality sukuk yields are similar. We're not expecting dramatic capital gains - just the yield.

Why only 5% volatility? Sukuk are low-risk assets. They don't swing like stocks. Their prices are driven primarily by interest rate movements and credit spreads, not earnings reports or market sentiment. Their role in a portfolio is stability and income, not growth.

The diversification role: Sukuk have very low correlation with equities - typically around 0.2 or below. When stocks crash, high-quality sukuk often hold steady or even rise (as investors flee to safety and central banks cut rates). This makes sukuk a crucial portfolio stabilizer. Morningstar's research warns that in periods of rising rates or inflation, bonds may be less reliable diversifiers than in the past - we saw this in 2022 when stocks and bonds fell together. But over a full market cycle, sukuk remain one of the best tools for reducing overall portfolio volatility.

Gold

Gold is a unique asset. It yields nothing. It produces no earnings, pays no dividends, generates no rent. Its long-run real return (after inflation) has been roughly zero - over centuries, gold has simply preserved purchasing power.

Why 5%? That's the historical long-run nominal return when you include inflation. Some forecasters are more conservative; JP Morgan's research projects about 5.2% annual return for gold over the 2025-2040 period.

Recent performance has been strong. Gold surged in 2024-2025, driven by central bank buying, geopolitical uncertainty, and inflation concerns. Some investors are very bullish on gold's prospects. Others argue this recent run has pushed prices above fair value and expect more modest returns going forward. The 5% estimate is a middle-ground long-term assumption - actual results could be higher or lower.

Why hold gold? Diversification. Gold has essentially zero correlation with stocks and bonds - Morningstar found it had the lowest correlation to U.S. stocks (approximately 0.03) of any major asset class they studied. In many historical equity drawdowns - 2000-02, parts of 2008, early 2020 - gold moved in the opposite direction of stocks, rising when everything else fell.

Gold is insurance. Its value in a portfolio comes not from maximizing returns but from reducing risk. When fear grips markets and investors flee to safety, gold is often where they run. That characteristic can be worth more than a higher expected return.

Cryptocurrency

Why these numbers? Crypto assumptions deserve extra explanation, because getting them right matters for portfolio construction.

A common mistake is to pair pessimistic return assumptions (say, 10%) with historical peak volatility (70%). That produces a terrible risk-adjusted return — a Sharpe ratio of roughly 0.14, compared to ~0.47 for equities. At those numbers, a portfolio optimizer would barely allocate to crypto at all. More importantly, such assumptions are internally inconsistent: if Bitcoin is maturing (which would moderate returns), volatility should also be moderating. You can't cherry-pick pessimistic returns and pessimistic volatility.

Our assumptions reflect recent institutional research:

• Bitwise Asset Management projects ~28% CAGR for Bitcoin over the next decade with volatility declining to ~33%.
• CF Benchmarks forecasts volatility falling toward ~28% as the market matures.
• Fidelity Digital Assets notes that Bitcoin's Sharpe ratio from 2020-2024 was ~0.96 — investors were compensated for the volatility.
• BlackRock now treats Bitcoin as an "alternative diversifier" alongside gold, noting its 10-year correlation with equities is only ~0.15.

We use 15% expected return and 50% volatility for Bitcoin as a base case. This is more conservative than the bullish institutional forecasts (which often cite 25-30%), but it produces a reasonable Sharpe ratio (~0.30) and reflects the thesis that Bitcoin is maturing into a "digital gold" role — still higher risk than equities, but with returns that justify that risk.

For Ethereum at 18% return and 60% volatility, we assign slightly higher numbers on both dimensions. Ethereum carries more uncertainty (its value depends on smart contract adoption, DeFi growth, and competition from other chains), but it also offers a staking yield (~3-5%) that Bitcoin lacks. The higher volatility reflects that Ethereum historically trades at roughly 1.1-1.3× Bitcoin's volatility.

Volatility is declining. This is the key insight. Bitcoin's volatility has structurally fallen as its market cap has grown - from 100%+ in 2013-2014 to 50-60% in recent years, with periods dropping into the 30-40% range. Fidelity notes that in October 2023, Bitcoin was less volatile than 92 stocks in the S&P 500. The pattern mirrors gold after it was freed from the dollar peg in 1971 - gold's volatility spiked to ~80% in the late 1970s, then gradually settled to ~15% as it became an established asset class. We expect Bitcoin to follow a similar trajectory.

Scenario ranges: These base-case numbers come with significant uncertainty. In a bear scenario (crypto adoption stalls), returns could be as low as 5% with volatility around 40%. In a bull scenario (Bitcoin becomes a global reserve asset), returns could hit 25-30% with volatility remaining elevated at 70%. We use the base case for portfolio optimization, but you should understand the range of outcomes is wide.

The investment case: Some investors see crypto as a potential diversifier: historically showing moderate correlation with stocks (lower than the correlation between stocks and bonds during the 2022 rate-hiking period). Bitwise projects Bitcoin's correlation with stocks and bonds to remain in the "low range between 0.00 and 0.50" over the next decade. AllianceBernstein has noted that crypto's correlation with equities appears to be falling while its correlation with gold may be rising — potentially making it more "gold-like" as an alternative store of value.

Important caveats: Crypto's market regime is evolving. It had near-zero correlation with stocks before 2020, then correlation spiked during the COVID-era liquidity surge, and has been shifting since. These assets are too young and too volatile to have stable long-term relationships.

Bitcoin and Ethereum move together: The two are highly correlated with each other, around 0.80. They tend to rally together and crash together. Holding both does not meaningfully diversify your crypto exposure.

A Note on Shariah Compliance

We use the Shariah compliance status listed by the ETF providers. I am not a Shariah scholar. We rely on their certification boards (like Ratings Intelligence Partners for WSHR, or Amanie Advisors for various SP Funds products).

Summary Table

Next Steps

• How They Move Together - Understanding correlations and what they mean for diversification
• Portfolio Calculations - The formulas behind Modern Portfolio Theory

Sources

These estimates are informed by:

• Morgan Stanley Wealth Management: Capital Market Assumptions (2025)
• BlackRock Investment Institute: Capital Market Assumptions
• AQR Capital Management: Alternative Thinking (2022)
• JP Morgan: Gold's Long-Term Expected Return
• Morningstar: 2024 Diversification Landscape
• S&P Dow Jones Indices: How Indexing Affects Shariah-Compliant Investing
• Historical index data from S&P, MSCI, and Dow Jones Islamic Market indices

Additional sources for cryptocurrency assumptions:

• Bitwise: Bitcoin Long-Term Capital Market Assumptions (2025)
• CF Benchmarks: Building Bitcoin Capital Market Assumptions (2025)
• Fidelity Digital Assets: A Closer Look at Bitcoin's Volatility (2024)
• BlackRock: Diversifying with Bitcoin, Gold, and Alternatives (2025)

These figures are updated periodically. Last update: January 2026.