{"id":256,"date":"2019-01-13T04:08:27","date_gmt":"2019-01-13T04:08:27","guid":{"rendered":"http:\/\/forefrontnews.cn\/finance2news\/?p=256"},"modified":"2019-01-13T04:08:27","modified_gmt":"2019-01-13T04:08:27","slug":"now-you-can-become-a-halal-investor-the-first-sharia-compliant-robo-adviser-launches-in-the-u","status":"publish","type":"post","link":"http:\/\/forefrontnews.cn\/?p=256","title":{"rendered":"Now you can become a Halal investor: The first Sharia-compliant robo-adviser launches in the U"},"content":{"rendered":"

Islamic finance is one of the fastest\u00a0expanding financial services sectors in the UK with specialist savings and loans products now widely available.<\/p>\n

There are six standalone Islamic banks and 20 conventional banks offering Sharia-compliant financial products and services in the UK at present – and these numbers are expected to rise.<\/p>\n

Savings products that operate under Sharia principles – where savers are given an expected profit rate rather than guaranteed interest – offered by the likes of Gatehouse bank often find their way into\u00a0our savings best buy tables.\u00a0<\/p>\n

Now the first Sharia-compliant robo-adviser, Wahed Invest, has launched in the UK, allowing savers to\u00a0invest in ethically responsible stocks, Islamic bonds called sukuk and gold.<\/p>\n

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Halal investing often get bracketed under the socially responsible investing banner because sin stocks such as alcohol<\/p>\n

All you have to do is chose the portfolio that aligns to your attitude to risk.\u00a0<\/p>\n

It’s important to mention that Wahed Invest’s classification as a robo-adviser is a misnomer because no advice is offered – you will have to decide which portfolio to choose for yourself. In fact the company steers clear from the robo-adviser classification.<\/p>\n

A spokesman for the firm said: ‘In the UK our investors self-select their own risk profile and we don\u2019t provide any guidance on the most appropriate strategy, as such, we refer to ourselves as an investment platform rather than as a robo-adviser.’<\/p>\n

However, the ‘robo’ element comes in the form of the white-labelled technology, provided by financial services firm WealthKernel, Wahed Invest uses for suitability assessments.<\/p>\n

You’d need at least \u00a3100 to invest through the platform.\u00a0You can do so through a general investment account or the tax-efficient stocks and shares Isa, but not a self invested personal pension as yet.\u00a0<\/p>\n

Mohammed Ibrahim Morshed, head of UK at Wahed Invest, said: ‘Our mission is to make Halal investing an accessible and affordable means of long-term saving for the millions of UK Muslims who currently feel excluded from mainstream financial services.<\/p>\n

\"Free<\/p>\n

‘For too long, the needs of the community have been overlooked, with many Muslims finding it impossible to build nest eggs that are in line with their faith.’<\/p>\n

Wahed Invest already operates in the US after being launched in 2015 but has now been authorised by the Financial Conduct Authority to expand into Britain.\u00a0<\/p>\n

How it works<\/h2>\n

Just like most robo-advisers, Wahed Invest asks you a series of basic questions including why you want to invest and how long for to gauge whether or not investing is appropriate for your circumstances.<\/p>\n

The algorithm would reject you from the application process if it considers that investing is not right for you.\u00a0<\/p>\n

You’re then asked for the type of account you’d like to open, followed by how much you’d like to invest.\u00a0<\/p>\n

Unlike most robo-advisers, which have an in-house investment team that manages\u00a0 ready made portfolios, Wahed Invest outsources this responsibility to WealthKernel.<\/p>\n

However, the online wealth manager says that all securities used in the portfolio selection process are continuously monitored by its ethical review panel to ensure they comply with Sharia requirements.<\/p>\n

How much does it cost?<\/h2>\n

The robo-adviser levies a yearly admin charge of 0.99 per cent for portfolios on sums up to \u00a3249,999 and 0.49 per cent thereafter.\u00a0<\/p>\n

This is on top of an investment charge which averages 0.74 per cent. So, those who choose to invest less than \u00a3250,000 face a bill of 1.73 per cent on average.<\/p>\n

This charge rises to 1.87 per cent if you opt for the most conservative portfolio.\u00a0<\/p>\n

You’ll also have to factor in transaction costs which are charged at 0.05 per cent.\u00a0\u00a0<\/p>\n\n\n\n\n\n\n
Cost comparison\u00a0\u00a0<\/caption>\n
Robo-adviser\u00a0<\/th>\nAdmin fees\u00a0<\/th>\nInvestment fees\u00a0<\/th>\nTransaction fee\u00a0<\/th>\n<\/tr>\n
Wahed Invest\u00a0<\/td>\n0.99 per cent for portfolios on sums up to \u00a3249,999 and 0.49 per cent thereafter\u00a0<\/td>\nAverages 0.74%\u00a0<\/td>\n0.05%\u00a0<\/td>\n<\/tr>\n
Nutmeg<\/td>\nFully Managed Portfolio: 0.75% up to \u00a3100k, 0.35% beyond. Fixed Allocation Portfolio: 0.45% up to \u00a3100,000, 0.25% beyond.<\/td>\n0.19% and 0.33% for standard and ethical plans respectively<\/td>\n0.08%\u00a0<\/td>\n<\/tr>\n
Wealthify<\/td>\n\u00a31 – \u00a315,000: 0.7% \u00a315,001 – \u00a350,000: 0.6% \u00a350,001 – \u00a3100,000: 0.5% \u00a3101,000+: 0.4%<\/td>\n0.21% on conventional portfolios and 0.54% for those with an ethical slant\u00a0<\/td>\n0.03%\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

How does it compare?<\/h2>\n

Investing through Wahed Invest is far more expensive than investing through other robo-advisers in the UK market.<\/p>\n

Nutmeg, the nation’s first and arguably best known robo-adviser, levies 0.75 per cent up to \u00a3100,000 and 0.35 per cent thereafter for both its fully managed portfolios and socially responsible portfolios.<\/p>\n

It also offers fixed allocation portfolios which cost 0.45 per cent up to \u00a3100,000 and 0.25 per cent thereafter.\u00a0<\/p>\n

This is in addition to the investment cost\u00a0which averages 0.19 per cent and 0.33 per cent for standard and ethical plans respectively.<\/p>\n

Another robo, Wealthify, operates a tiered charging structure ranging from 0.7 per cent on balances up to \u00a314,999 to 0.4 per cent on balances above that amount.\u00a0\u00a0<\/p>\n

Reason behind the cost\u00a0<\/h3>\n

Kareem Tabbaa, chief product officer at Wahed Invest, said: ‘The Islamic Finance Industry is not as mature as the conventional finance industry, and therefore fund costs tend to be higher due to certain inefficiencies.\u00a0<\/p>\n

‘We have already started taking the steps to redefine this space, starting in the US, by releasing our own Wahed S&P Halal Index funds which have zero management fees, thereby significantly decreasing the costs for our clients. We aim to share that same efficiency globally across our different jurisdictions.’<\/p>\n

‘For the avoidance of doubt, the total fee range is between 1.1 per cent and 1.87 per cent – the lower end of this range is competitive even when compared to conventional providers, but in Islamic Finance is almost unheard of.’<\/p>\n

Investment costs average 0.21 per cent on conventional portfolios and 0.54 per cent for those with an ethical slant.\u00a0<\/p>\n

In fairness to Wahed Invest, the cost of Halal investments, is significantly more than the conventional shares and bonds.<\/p>\n

But if you’re not a Muslim but seek to invest in a socially responsible manner, it could pay to stay clear of costly Sharia-compliant investments.<\/p>\n

Investing in an ethical proposition offered by Nutmeg and Wealthify is around a third cheaper than Wahed Invest Halal offerings on average (1.08 per cent and 1.24 per cent versus 1.87 per cent).\u00a0<\/p>\n

Verdict\u00a0<\/h2>\n

Offering a platform that enables Muslims to invest in a way that is aligned to their beliefs without having to worry about important investment considerations such as portfolio diversification is commendable. The trouble is, it’s simply too expensive.<\/p>\n

Non-Muslims who, for one reason or another, might be considering to invest in a Sharia-compliant manner are probably better off investing in an ethical portfolio offered by another robo-adviser from a charges standpoint.<\/p>\n

It’s nigh impossible to give you an indication on how both types of portfolios stack up against each other as explored\u00a0here.<\/p>\n

Halal investing is an area that is not often explored in the financial industry and many bona fide investment advisers aren’t well versed in the area.<\/p>\n

In truth, many\u00a0Muslims in the UK are also already invested in a way that isn’t aligned to their beliefs without even knowing – through their workplace pension.<\/p>\n

Most standard auto-enrolment workplace pensions aren’t Sharia\u00a0compliant – they’d probably be too expensive if they were.<\/p>\n","protected":false},"excerpt":{"rendered":"

Islamic finance is one of the fastest\u00a0expanding financial services sectors in the UK with specialist savings and loans products now widely available. There are six standalone Islamic banks and 20… <\/p>\n","protected":false},"author":1,"featured_media":257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[59,60,52,61,58],"views":70,"_links":{"self":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts\/256"}],"collection":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=256"}],"version-history":[{"count":0,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts\/256\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/media\/257"}],"wp:attachment":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=256"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}