The sukuk market, valued at $930 billion and sometimes referred to as the Islamic counterpart of bonds, is becoming increasingly complex for regular investors to ignore. Despite their modest size just $5.8 billion in assets under management sukuk-focused funds have witnessed significant advancements in recent years, including as the emergence of passive exchange-traded funds (ETFs), according to a report.
According to Morningstar statistics, the market for funds that invest in sukuk is relatively small compared to the sukuk market, which increased to $930 billion in outstanding securities by the end of 2024, up from $863 billion in 2023. As of May 2025, Sukuk funds held $5.8 billion in assets. Sukuk ownership is dominated by Islamic banks, resulting in a market with limited liquidity and shallow trading activity.
A modest but expanding group of passive and active choices are available in the market for sukuk funds targeted at international investors. Passive sukuk ETF costs, which are respectable but higher than those of comparable bond choices, range from 0.35 to 0.50 percent. These fees are primarily focused on the investment-grade market. Actively managed sukuk funds denominated in US dollars typically have fees of 1.34 percent, which is expensive when compared to traditional global diversified or emerging-markets bond funds. By making investments in riskier, below-investment-grade issuers, active sukuk funds frequently have greater space to increase rates.
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