Hejaz Sukuk Active ETF (ASX: SKUK): The Sharia-Compliant Bond Alternative

The Hejaz Sukuk Active ETF (ASX: SKUK) provides Australian Muslim investors with a stable, lower-volatility investment option that aligns with Sharia principles. Designed as a halal alternative to conventional bonds and fixed-income products, SKUK provides access to the global sukuk market, an asset class built on ownership, rental income, and profit-sharing, not interest (Riba).

For Muslims seeking financial stability without compromising Sharia compliance, sukuk are a cornerstone of balanced portfolio construction. SKUK brings this traditionally hard-to-access asset class directly to the ASX in a liquid, transparent structure.

This page explains what sukuk are, how SKUK works, its investment strategy, risks, Sharia screening process, and how investors can buy units through the ASX.

What Are Sukuk and What Is SKUK?

Sukuk are often described as “halal bonds”, but they operate very differently from conventional fixed-income instruments. Rather than lending money in exchange for interest, which is prohibited under Sharia, sukuk represent fractional ownership in real assets, such as property, infrastructure, or commercial ventures.

The Hejaz Sukuk Active ETF (ASX: SKUK) is an ASX-listed fund that invests in a diversified basket of global sukuk. Instead of buying individual sukuk (which can be costly, complex, and difficult to access), SKUK allows investors to hold a professionally managed, Sharia-compliant portfolio in a single, liquid, exchange-traded product.

Example: Instead of purchasing one sukuk certificate tied to a single project, SKUK gives you exposure to many Sharia-compliant issuers, smoothing returns and reducing risk.

SKUK is particularly valuable for Muslim investors who want the defensive portion of their portfolio to remain fully aligned with Sharia, a challenge when most conventional fixed-income instruments rely on interest (Riba).

How Does SKUK Work?

SKUK invests in a global range of sukuk selected to balance stable income generation with capital preservation.

Key Features

Investment Universe: International Sharia-compliant sukuk issued by governments, corporations, and asset-backed ventures
Active Management: Hejaz actively selects and monitors sukuk holdings, applying Sharia screens and credit analysis
Income Model: Regular distributions funded by rental income or profit-sharing from the underlying assets
Liquidity: Trades like any ASX security under SKUK, offering far greater accessibility than direct sukuk markets

Sharia Compliance for SKUK

SKUK is structured and managed to comply with Sharia principles. This makes SKUK suitable for investors seeking stable returns while remaining aligned with Sharia investment principles.

Why Sukuk Are Sharia-Compliant

Asset Ownership: Sukuk represent ownership in physical assets or ventures
No Interest (Riba): Return comes from rent or profit-sharing, not fixed interest
Issuer Screening: Sukuk issuers must pass strict Sharia screens
Continuous Oversight: A dedicated Sharia board ensures ongoing compliance

To learn more about how we apply Sharia-compliant screening criteria across all our investment products, please visit our Sharia Screening Methodology page for more details.

How to Buy SKUK

Investing in SKUK is straightforward:

Open the Halal Money app
Tap “Invest” in the navigation bar
Browse halal ETF options
Select Hejaz Sukuk Active ETF (ASX: SKUK)
Tap “Buy”
Enter your investment amount
Confirm your order

Fees, Risks and Performance

As an actively managed ETF, SKUK charges the management fees component covers certain ordinary expenses such as Responsible Entity fees, investment management fees, custodian fees, and administration and audit fees. For full details about fees and costs, please refer to ours Product Disclosure Statement (PDS).

Key Risks

Credit Risk: The underlying sukuk issuer may default
Market Value Risk: SKUK’s unit price can fluctuate with global sukuk demand
Liquidity Risk: Underlying sukuk markets can be less liquid than government bonds
Sharia-Compliance Risk: Ongoing screening is required to maintain adherence to Sharia

Hejaz advisers can help determine if SKUK fits your risk profile and long-term investment strategy. Please refer to our Product Disclosure Statement (PDS) for full details about the risks.

Who Is SKUK Suitable For?

SKUK May Suit:

Investors seeking steady, lower-volatility income
Muslims wanting a Sharia-compliant alternative to conventional bonds
Portfolios needing defensive diversification to complement growth funds like Hejaz Equities Fund Active ETF (ASX: ISLM)
Beginners and intermediate investors wanting a simple way to access sukuk through the ASX

SKUK May Not Suit:

Those seeking aggressive capital growth
Ultra-short-term investors expecting rapid price movements
People wanting exposure exclusively to equities

Start Building Your Portfolio

The Hejaz Sukuk Active ETF (ASX: SKUK) fills a critical gap in the Australian market, providing Muslim investors with true Sharia-compliant fixed-income exposure that balances stability, income, and liquidity.

For Australians looking to build a well-rounded, halal investment portfolio, SKUK offers the defensive foundation traditionally filled by bonds but without compromising Sharia principles.

FAQ’s

Is SKUK a Sharia-compliant ETF?

Yes. Hejaz Sukuk Active ETF (ASX: SKUK) adheres to Sharia investment principles. This includes avoiding interest, ensuring all underlying sukuk represent ownership in real assets, and maintaining oversight from the Hejaz Sharia board.

What is a sukuk and how is it different from a conventional bond?

A conventional bond is a debt instrument that pays interest, which is prohibited in Islam. A sukuk, by contrast, represents ownership in an asset or project. Income is generated through rental or profit-sharing arrangements, making sukuk Sharia-compliant.

How does SKUK generate income?

Income is produced from the sukuk portfolio through rental income or profit-sharing, not interest. This cash flow is distributed to investors periodically in accordance with Sharia principles.

What fees does SKUK charge?

The fund charges the management fees component covers certain ordinary expenses such as Responsible Entity fees, investment management fees, custodian fees, and administration and audit fees. For full details about fees and costs, please refer to ours Product Disclosure Statement (PDS). Normal brokerage fees apply when trading SKUK on the ASX.

What are the main risks of investing in sukuk?

Core risks include:

Credit risk: An issuer may default
Market value risk: The value of sukuk can fluctuate
Liquidity risk: Sukuk markets may be less liquid than conventional bond markets
Sharia-compliance risk: Requiring ongoing oversight

Please refer to our Product Disclosure Statement (PDS) for full details about the risks.

What’s the difference between SKUK and ISLM?

Hejaz Sukuk Active ETF (ASX: SKUK)is an income-focused sukuk ETF offering stability.
Hejaz Equities Fund Active ETF (ASX: ISLM)provides diversified global equities exposure for long-term capital growth.

Many investors combine both funds for balance.

Why should I invest in SKUK through Hejaz?

By investing with Hejaz, you gain access to:

Specialist Sharia investment expertise
Guidance on portfolio construction
Full access to the halal ETF range
Support from advisers trained in Islamic wealth principles

Disclaimer:

Hejaz Asset Management Pty Ltd (ABN 69 613 618 821, AFSL 550009) is the Investment Manager for Hejaz investment funds. The information contained on the Hejaz website, in our product documentation, and in any promotional material is provided for general information purposes only and does not take into account your personal objectives, financial situation, or needs. It is not intended to be, and must not be relied upon as, financial, legal, tax, or other advice. You should consider whether the information is appropriate for your circumstances and read the relevant Product Disclosure Statement (PDS) or offer document before making any investment decision. We recommend you obtain independent professional advice before investing.

All investments carry risk. The value of investments and the income from them can go down as well as up, and you may lose some or all of the capital you invest. Past performance is not a reliable indicator of future performance. Product features, fees, and charges may change without notice. While we aim to ensure the accuracy of information provided, Hejaz Asset Management Pty Ltd makes no representation or warranty as to the accuracy, completeness, or currency of the information and accepts no responsibility for any loss or damage arising from reliance on it.

References to “Islamic” or “Sharia-compliant” products relate to compliance with Islamic finance principles as interpreted by our appointed Sharia advisers. These interpretations may differ from those of other scholars or organisations.

By accessing the Hejaz website, materials, or products, you acknowledge and agree to the terms of this disclaimer.