Wealthsimple is a fintech startup in Canada providing investment services.

Wealthsimple will unveil an ETF that will offer investors, particularly Muslims, exposure to a diversified index of Shariah-compliant stocks. (BetaKit)

Dubbed the Wealthsimple Shariah World Equity ETF, it will be managed by Toronto-based Mackenzie Investments, and is expected to list in early 2021.

Shariah investing

Shariah funds must comply in their investing with the Muslim religious principles and Shariah law. A kind of socially responsible entity, these funds shun sectors such as alcohol, tobacco, and gambling.

The Wealthsimple Shariah World Equity ETF will therefore invest in a diversified portfolio of Shariah-compliant stocks. These would be screened and certified on a quarterly basis to ensure they are compliant with Shariah principles.

To ensure geographical diversification, the fund will invest in equities of companies in North America, Europe, Australia, and Asia.

The proposed ETF by Wealthsimple shows how fintechs are moving to meet the investing needs for the Islamic population.

By venturing into Islamic finance they are taking the responsibility to conform with the ethical and religious obligations of Islam.

Compliant with both Shariah and financial regulations

“More work needs to be done in the space, including this to-be-launched ETF, to come up with solutions which solve much more complex problems than Shariah branding,” said Manzil CEO Mohamad Sawwaf. “This should also provide proof to all levels of government that Shariah-compliant financial solutions can be created under the current regulatory frameworks without compromising these religious principles.”

Manzil is a Canadian neo bank offering halal-certified products. It aims to strike a balance between financial needs and Islamic religious obligations for Canadian Muslims.

Wealthsimple’s motto

“Our mission is to give everyone, regardless of beliefs, access to financial freedom,” said Wealthsimple’s chief investment officer Ben Reeves. “Today, Shariah-compliant self-directed investment options are limited and expensive, and we saw an opportunity to change that.”

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Image Credit: Scarborough Muslim Association