For religious Muslims governed by Sharias that require strict compliance with high moral and ethical standards, Wahed Invest Inc. is likely a welcome platform in the robo-advisor environment. Particularly for investors who lack large sums of money, this automated investment platform opens the door to a professionally-managed investment portfolio. Wahed, as a company, ensures that all contracts, processes, and decisions are taken in compliance with Islamic Ethics. Investments are screened for the presence interest, or Riba, as well as certain debt ratios. Wahed Inc. follows the AAIOFI standards. The Shariah board ensures that all returns obtained through Wahed are halal. Wahed uses the “Purification Methodology” to ensure that. Purification is the cleansing process that requires any investment income that might have been generated from unlawful activities according to Islamic principles be given to charity. Wahed’s Shariah Board calculates the purification amounts and accrues it daily for all securities. This is calculated by considering the following:
- The number of shares of each security
- The net income per share for each security
- Number of days held for each security
Wahed provides you with a unique annual purification report that includes both the methodology used and the calculation figures. Even non-Muslims interested in an ethical investing approach may want to try out Wahed Invest.
Overall rating: 3.8/5
- Minimum investment corpus in the account: $100
- Fees: 0.99% per year ($100 – $249,999), 0.49% per year ($250,000+)
Let’s take a look at the pros and cons of Wahed Invest:
- Shariah compliant investing
- Socially responsible investing
- Unlimited deposits and withdrawals
- Free portfolio recommendation
- No penalty for zero balance
- High fees
- Investment options are (understandably) restricted
- No telephonic or personal customer support
Account setup – 4.5/5
Opening an account with Wahed is simple. Customers are asked to complete a risk assessment questionnaire. Based on that, Wahed will recommend an optimal portfolio. If you are happy with this portfolio allocation, you can proceed to complete the online registration forms. After that, you can transfer funds and Wahed will invest them according to your chosen portfolio.
Goal Setting: 3.5/5
Wahed’s platform evaluates an investor’s risk profile by asking them a few basic questions about their investment goals, liquidity needs, time horizon, among other topics. Based on this information, Wahed works on optimizing the portfolio by finding the correct combination of securities that can provide the highest potential return vis-à-vis the investor’s risk appetite. Your expected return depends on your risk profile and asset allocation. Users with a conservative profile are expected to earn less and be exposed to less risk than users with an aggressive profile, who will be exposed to more risk in exchange for a possibility of higher returns.
You can view your portfolios’ historical performance on Wahed’s Portfolio page.
Account Services: 3.5/5
In order to display its commitment to best practices in the field of Shari’ah compliance, Wahed has designated its Shariah review to Shariyah Review Bureau, a leadingShari’ah advisory firm licensed by the Central Bank of Bahrain. The review panel consists of 3 scholars namely Shaikh Muhammad Ahmad, Mufti Faraz Adam and Dr. Aznan Hasan and it advises Wahed Invest on matters of Shari’ah compliance.
You will be able to monitor your performance daily through the platform. Wahed will also send you monthly reports on your registered email address, which will have a summary of your portfolio holdings and performance. Wahed has an online portal that can be accessed at any time to get a comprehensive report on your portfolio’s performance to date.
In case you want to close your account, you can do it by sending an email to email@example.com.
Portfolio Content: 3.5/5
Since all the investments made through Wahed need to be halal, the board screens the investment avenues based on a strict set of constraints. In brief, any portfolio cannot hold shares of a company that:
- Provides non-Islamic financial services and any other related interest services.
- Manufactures/sells products or services not approved by the Ethical Board (i.e. liquor, tobacco, gambling, pornography, weaponry etc).
- Has interest revenue exceeding a certain percentage of total revenue (usually 5%) – unless it is given to charity.
- Does not have a certain percentage of non-liquid assets
- Does not comply with certain debt ratios
Wahed’s main objective is to provide a low-cost investment advisory service for smaller portfolios. Wahed allocates a portion of funds into ETFs as they help reduce unnecessary overheads while providing efficient diversification benefits. Investing in individual assets involves multiple transactions, which can lead to higher costs.
Wahed invests in the following:
- Global stocks
- Emerging Market stocks
- Sukuks (Islamic Bonds)
- Real Estate
Portfolio Management: 3.5/5
Wahed uses the Modern Portfolio Theory to optimize and manage client portfolios. The client portfolio is managed by a combination of the recommendations made by Wahed’s algorithms as well as the expertise of its Investment Committee. The Committee thoroughly reviews all portfolio recommendations before making any changes to the client’s portfolio.The frequency of rebalancing is determined by several factors. If the investor’s goals or risk profile changes, the portfolio will be rebalanced. The assets will be rebalanced when funds are added to or withdrawn from the account. A major change in market volatility might spur rebalancing. The portfolio may also be rebalanced if there’s a great deviation from the consumers expected return. Wahed will rebalance your portfolio whenever:
- There is a change in your risk profile, which can have a significant impact on your investment goals.
- Whenever funds are added or withdrawn.
- When there is a major change in market volatility
User Experience: 3/5
Wahed Invest comes in both android and iOS versions. However, the app interface seems to have issues showing the last letter and decimals of the word and numbers.This may be something that Wahed will have to resolve with their backend team.
The desktop site is functional. Nothing much to write about, nothing much to criticise either.
Customer Service: 2.5/5
All customers have access to Wahed’s customer support team that will answer any questions regarding their account. However, Wahed doesn’t do any consultations over the telephone or in person. Requests take long to get resolved.
Education and Security: 3.5/5
The site has a clear and simple FAQ section which answers most of the client’s questions about Wahed quite well. It’s journal section contains a lot of articles about Halal investing and millennial focused investing, the demographic which every robo advisor wants to engage. Wahed uses 256 bit SSL encryption so your account is quite safe.
Commission and Fees: 3/5
Wahed has a wrap account approach to fees. Like most robo-advisors, the company levies fees based upon investors’ total assets under management without charging commissions for trades and other activities. Here is the current fee structure:
$100 to $249,999 – 0.99% per year
$250,000 onwards – 0.49% per year
Wahed Invest is a new and unique entrant into the targeted robo-advisor field. This unique robo-advisor claims to be the world’s first automated Islamic investment platform governed by Shariah, a spiritual law that governs not only religious rituals, but day-to-day aspects in Islam. Wahed Invest has been certified as an ethically compliant wealth advisor. The investments are scrutinized by a committee of Islamic and ethical scholars. Wahed Invest is meant to appeal to the two billion Muslims across the world .
Wahed was founded by Junaid Wahedna during the year 2015 in New York City, New York. Wahed Invest was beta-tested for a year and had a soft launch in September 2016. The company’s idea was sparked by Wahedna’s interaction with a cab driver who had invested all his money into Apple stocks after his mosque leader had told him that Apple is Shariah compliant.
Wahed Invest raised $7 million seed capital from investors including Afkar Holdings managing partner Khalid Al Jassim, former JPMorgan Chase director John Elkhair, director of McKinsey & Company Laurent Nordin, former McKinsey & Company partner Nasr-Eddine Benaissa in 2017. Next year, Wahed Invest raised a £6-million round with billiard ball Capital and BECO Capital.
In March 2018, a mobile app was launched to manage halal investments. In August 2018, Wahed Invest made its first international expansion by launching its operations in Great Britain. In November 2018, the corporate launched a Halal Stock Screener mobile app to match 50,000 sharia-compliant stocks. In May 2019, Wahed Invest announced the worldwide expansion of the robo-advisor to 130 countries. In September 2018, the corporate launched 2 sharia-compliant index-tracking funds.
As per CEO Junaid Wahedna, the Wahed portfolios have performed better—with less risk—than their traditional competitors.
Sharia compliant investing, also referred to as Halal investing, could be considered a subsector of ethical and socially responsible investing. In contrast with the goals of traditional investing to maximise returns and minimize risk, Sharia compliant investing is meant to comply with the ethics and social-welfare beliefs of Islam.
The Wahed board uses a strict set of guidelines to scrutinize the individual investments. Wahed Investment avoids companies that provide financial services that are non Islamic. The moral board shuns investment in providers/supporters of things like gambling, liquor, tobacco and pornography. In compliance with Islamic lending practices, Wahed won’t invest in companies earning interest income greater than approximately 5% of total revenue unless the surplus is given to charity. Also, the Wahed investments are required to take care of a particular percentage of non-liquid assets.
Shariyah Review Bureau, oversees the compliance and financial ethics of the individual Wahed holdings. The types of investments in Wahed are distinct, yet the investing approach is analogous to many other robo-advisory firms.