Investment portfolio for observant Muslims
Socially-responsible option turns out to be ‘enormously successful’
TORONTO — Robo-adviser Wealthsimple has launched a new investment portfolio for observant Muslims, a move the company says builds off its success targeting smaller, underserviced groups of investors.
The Toronto wealth management firm says its Halal investing portfolio is designed for those adhering to Islamic laws that prohibit investing in certain companies and financial products.
Wealthsimple CEO Michael Katchen hopes the portfolio will resonate with a portion of the public, the same way its socially responsible investment portfolio options launched last year have.
“With socially responsible investing, people thought it was going to be a such a small niche, that it wouldn’t be worth our time, but it turned out to be enormously successful,” Katchen said. “We now see a third of our clients in socially responsible portfolios.”
Katchen said there are only a handful of Islamic-compliant portfolio options available in Canada, some of which he said have “egregiously expensive” management expense ratio fees upward of more than 2.8 per cent, as well as high account size minimums.
Wealthsimple’s Halal portfolio will have the same fee structure as its other core offerings, with 0.5 per cent on the first $100,000 invested and no account minimum.
Market size has also figured into its introduction of the portfolio, Katchen said. With slightly more than one million Canadians identifying themselves as Muslim in the latest census, representing 3.2 per cent of the total population, “it’s important to us that we go after opportunities that represent growth,” he said.
Wealthsimple designed its Halal portfolio with global index provider MSCI, using a methodology approved by its committee of Shariah scholars. The stocks included in the portfolio are filtered using two processes. A business activity screen filters companies that are directly active in, or derive over five per cent of their revenue from, a prohibited Muslim activity such as alcohol, tobacco, gambling or pork production. A financial screen filters out companies that get significant income from interest or have considerable leverage.