Toronto-Based Wealthsimple Launches Shariah-Compliant Portfolio Firm broadens its product offerings in the crowded robo-adviser marketBy David George-Cosh
https://www.wsj.com/articles/toronto-based-wealthsimple-launches-shariah-compliant-portfolio-1503460802
Toronto-based automated investment provider Wealthsimple Financial Inc. introduced a Shariah-compliant portfolio targeting U.S. and Canadian investors on Wednesday in a move to expand its product offerings in an increasingly crowded robo-adviser market.
Robo-advisers have recently emerged as a popular segment of the market among passive individual investors seeking lower management fees and a reliable return on investment. However, the space has become crowded, with companies such as Charles Schwab Corp. and Bank of America Corp. launching their own robo-adviser offerings alongside startups such as Wealthfront Inc. and Betterment.
Robo-advisers are likely to report double-digit growth in assets under management in coming years from a base of less than $100 billion in 2016, according to a report released by Fitch Ratings Inc. last month. The Fitch report cited a recent study by KPMG that estimates robo-advisers’ assets under management will total more than $2 trillion by the end of 2020.
Wealthsimple’s Halal Investing portfolio is aimed at setting the company apart from its peers, said Michael Katchen, the company’s chief executive and co-founder.
“The Muslim community in North America is extremely large and underserviced,” Mr. Katchen said. He expects the portfolio’s interest to closely mirror the company’s socially responsible products that began as a niche offering and grew to one of its biggest services.
The new portfolio will track a group of 50 companies traded in the U.S. and Canada that don’t generate more than 5% of their revenue from alcohol, tobacco, gambling or pork production, and don’t make significant income from interest. Wealthsimple’s fees are a flat 0.5% for the first $100,000 invested and drop to 0.4% on any additional investment.
Mr. Katchen said there is a lack of affordable options aimed at Muslim investors, which opened the opportunity for the company to develop its own offering. He cited the Global Iman Fund managed by Global Growth Assets Inc., with a management fee of 2.82%, as a competitor. Another rival is New York-based Wahed Invest, which offers Shariah-compliant investments with management fees ranging from 0.29% to 0.99%.
“This is a way for people to achieve their long-term goals and make it acceptable to a group which hasn’t had that kind of option in the past,” Mr. Katchen said. CONTINUE AT SITE
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