Wealthsimple Inc. launched its first Sharia-compliant ETF on the NEO Exchange on Wednesday.
The Wealthsimple Shariah World Equity Index ETF is designed to replicate the performance of the Dow Jones Islamic Market Developed Markets Quality and Low Volatility Index.
The index consists of equity securities in developed markets that are Sharia-compliant, meaning they do not generally derive their income from the following industries: alcohol, tobacco, pork-related products, weapons and defense, conventional banking, conventional insurance companies and adult entertainment such as hotels, casinos and cinema.
The ETF will not use derivative instruments or short-selling strategies. As well, the fund will not invest in interest-bearing money market instruments or maintain cash balances in interest-bearing accounts, take out loans requiring interest payments or lend its assets for a fee or commission.
“As the ETF market continues to grow, Shariah-compliant self-directed investment options remain limited and expensive and we saw an opportunity to change that,” said Ben Reeves, Wealthsimple’s chief investment officer, in a release. “Having investment options that honour and reflect the values of investors across our country is at the heart of our mission.”
Mackenzie Investments will act as the ETF’s trustee, manager and portfolio manager.
Both Mackenzie and Wealthsimple have retained Ratings Intelligence Partners, a Shariah advisory firm, to review and certify the ETF as compliant at its launch and to conduct bi-annual audits.
The ETF has a management fee of 0.5%.