Thanks to a newly launched ETF from Wealthsimple, Canadians who desire to apply Islamic principles to their financial decisions may find it a little easier.
The Wealthsimple Sharia World Equity Index ETF, which trades on the NEO Exchange under the ticker WSHR, is Canada’s first sharia-compliant ETF. The low-cost ETF focuses on stocks from developed-market issuers that have been determined to be sharia-compliant, as well as having the highest combination of quality and low-volatility multi-factor scores, with Mackenzie Investments serving as trustee, manager, and portfolio manager.
“In a statement announcing the ETF’s introduction last week, Wealthsimple’s Chief Investment Officer Ben Reeves stated, “As the ETF market continues to develop, Shariah-compliant self-directed investment options remain limited and expensive, and we saw an opportunity to change that.” “Our purpose is to provide investing solutions that honor and reflect the values of investors across the country.”
Can Muslims invest in ETFs?
“How do we manage risk?” you might be wondering. Diversification is beneficial. Non-Muslims should invest in equities and bonds to diversify their holdings. Instead, Muslims could invest in equities and gold. A new Shariah Standard on gold was recently adopted by the Accounting and Auditing Organization for Islamic Financial Institutions. As a result, Muslims can invest in gold ETFs.
Risk is reduced by rebalancing a stock market portfolio with bonds or gold. When equities fall sharply, for example, many investors put their money in bonds, gold, savings accounts, or mattresses. Needless to say, the bed is not something I would recommend.
When there are more buyers than sellers in a market, demand for that asset type rises. This may result in a price increase. As a result, when stock prices fall, gold and bond prices often climb as investors flee to bonds or gold.
Here are a few illustrations. Five times since 1986, global markets have declined more than 10%: in 1990, 2000, 2001, 2002, and 2008. Bonds and gold, as shown below, either increased in value or did not fall as far.
What exactly is an Islamic ETF?
An Islamic ETF exclusively tracks an Islamic benchmark index that includes Shariah-compliant corporations as index constituents. An Islamic ETF must also employ a Shariah adviser/committee to give knowledge and guidance to ensure that its structure, investments, and governance are all compliant with Islamic law.
Are there any halal investing accounts?
INTEREST PAYMENT AND CHARGE (RIBA) In Islam, interest payments and investments with an interest component are absolutely prohibited. Interest is not regarded as Sharia compatible because it is considered an exploitative behavior.
Is investing in gold mutual funds halal?
Currently, the majority of the world’s 1.6 billion Muslims do not own gold. Islamic investors and financial institutions have avoided gold-related financial instruments for years. Gold is considered a “Ribawi article” under Sharia (sometimes spelled Shariah) law. As a result, Muslims are unable to trade it for future worth or speculation.
Where do you look for halal stocks?
Are you looking for Halal stocks?
- Debt ceiling. According to experts, a company’s stock can be classified as Halal if the debt-to-value ratio is less than 33 percent.