Islamic equity funds constitute a substantial segment of sharia-compliant finance, aiming to provide investors with diversified portfolios that are in accordance with Islamic principles. These principles encompass the prohibition of interest (ribā), speculative activities (gharar/maysir), and involvement in unethical industries. Islamic equity funds experienced significant growth in the late 1990s and have evolved over time in strategy, shifting from mid-cap to large-cap stocks and balancing value and growth investments. This evolution mirrors conventional trends while adhering to ethical screens. Governance by sharia boards aims to ensure compliance through multistage screening of business activities, financial ratios (e.g., debt thresholds), and purification processes to exclude non-permissible income. Fund structures operate under muḍāraba (profit-sharing) or wakāla (agency) contracts, emphasizing risk-sharing and asset-backed transactions. Investor behavior is influenced by a combination of faith-based and financial motivations, though studies have identified tensions between ethical commitments and the pursuit of returns. Comparative analyses reveal mixed performance outcomes: Islamic equities have demonstrated resilience during crises (e.g., 2008 and 2020) with lower systematic risk. However, there is a debate regarding underperformance relative to conventional counterparts in stable markets. The spillover effects and economic linkages that characterize Islamic equity markets underscore their increasing integration into global finance, albeit with regional disparities in impact. Notwithstanding the challenges, including divergent scholarly interpretations of compliance criteria and fatwa shopping, Islamic equity funds persist as competitive alternatives, offering hedging benefits and ethical alignment.