Toronto-based robo-advisor Wealthsimple Inc. is introducing a “Halal investing portfolio” for observant Muslims.
“Religious Muslims are prohibited from profiting from some forms of interest, as well as from certain business activities, like alcohol, tobacco and gambling,” Wealthsimple says in a news release announcing the new Halal investment portfolio.
The new portfolio will enable Muslim clients to use the investment platform while also adhering to Islamic laws. Wealthsimple will apply the same passive investment strategy it uses with other portfolios. In addition, to keep with the same practices used in Wealthsimple’s standard and socially responsible investing portfolios, there will be no account minimum. Fees will also remain at 0.4% to 0.5% of assets managed.
“A lot of the common financial products are off the table for observant Muslims, and many of the available options are expensive or have high minimums,” says Michael Katchen, CEO and co-founder of Wealthsimple, in a statement. “We wanted to offer a portfolio that had all the benefits of our other portfolios while being compliant with Islamic investing practices.”
Wealthsimple designed the Halal investing portfolio in partnership with New York-based MSCI, a provider of research-based indices and analytics. MSCI’s committee of Shariah scholars approved the methodology.
The portfolio itself consists of 50 stocks intended to maximize diversification and track the MSCI ACWI Islamic index. These stocks are filtered by a business activity screen and a financial screen, the firm says
The business activity screen filters companies that derive over 5% of their revenue from prohibited activities such as alcohol, tobacco, gambling and pork production. The financial screen filters out businesses gaining considerable income from interest owed.
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