Sukuk, finally explained: the beginner's guide I wish I'd had

October 7, 2026 · by Iftikar

What is sukuk

A sukuk is a certificate of ownership in a real asset: a building, a highway, an airport terminal. You earn money from what that asset produces, not from interest. The word itself just means "certificates" in Arabic.

How it differs from a bond

A bond is a loan. You lend money to a government or company, and they pay you interest. Interest (riba) is not allowed in Islamic finance, so a sukuk can't work that way. Instead of lending, you own. Instead of interest, you get a share of the asset's profits or rent. And if the asset loses value, you share that risk. A bondholder is still legally owed their money no matter what.

A real life example

In June 2014, the UK became the first Western country to issue a sovereign sukuk. It raised £200 million for five years, using an al-Ijara structure: instead of paying interest, the government paid investors profits from the rental income on three government-owned properties. The profit rate was 2.036%, in line with regular UK government bonds of the same length. Investors placed £2.3 billion in orders, more than ten times what was on offer, with buyers from the UK, the Middle East, and Asia. The UK did it again in March 2021 with a £500 million sukuk. That's the whole idea in action: real assets, real rent, no interest.

Sukuk options in the USA

SP Funds Dow Jones Global Sukuk ETF (SPSK) — listed on NYSE Arca. A US ETF tracking the Dow Jones Sukuk index. 0.50% expense ratio, monthly distributions.
Amana Participation Fund (AMAPX) — a US mutual fund from Saturna Capital that invests in sukuk, aimed at capital preservation.
Azzad Wise Capital Fund (WISEX) — a US mutual fund from Azzad Asset Management focused on sukuk.

Sukuk options in the UK, EU, and Australia

UK:

HSBC Global Sukuk UCITS ETF — listed on the London Stock Exchange (tickers HBKS in GBP, HBKU in USD). Tracks the FTSE IdealRatings Sukuk Index. 0.37% annual fee.
iShares $ Sukuk UCITS ETF — also listed in London, pays quarterly distributions.
Franklin Global Sukuk Fund — a UCITS mutual fund registered for UK investors, running since 2013.

EU:

Franklin Global Sukuk Fund — Luxembourg UCITS with EUR share classes, $1,000 minimum investment.
Xtrackers Salam Sukuk ETF (XASB) — from DWS, tracks a global USD sukuk index.
The HSBC sukuk ETF above is also listed on Euronext Paris.

Australia:

Hejaz Sukuk Active ETF (SKUK) — listed on the ASX since November 2023, follows AAOIFI standards.

One thing worth knowing: the big UCITS sukuk funds (Franklin included) are not offered to US residents. That's why the US and European lists look different.