Product Overview of Wahed Invest
Introduction
Wahed Invest is a pioneering robo-advisor that specializes in Sharia-compliant investing, making it an attractive option for Muslims and those who adhere to ethical and socially responsible investment principles. Established in 2015, Wahed Invest launched its services in the U.S. in 2017 and in the U.K. in 2018, positioning itself as the world’s first automated Islamic investment platform.
Key Features
Sharia-Compliant Investing
Wahed Invest is governed by Islamic financial principles, ensuring that all investments are halal and compliant with Sharia law. This means the platform avoids industries associated with gambling, tobacco, alcohol, pornography, and usury, aligning investments with the ethical and social-welfare beliefs of Islam.
Portfolio Construction and Management
Wahed Invest uses Modern Portfolio Theory (MPT) to construct and manage portfolios. Investors answer a series of questions about their investment goals, liquidity needs, time horizon, and risk tolerance, which helps determine their optimal portfolio allocation. The platform offers six risk profiles ranging from very conservative to very aggressive, and portfolios are composed of asset classes such as global equity, emerging markets equity, U.S. equity, REITs, commodities, and fixed income, including Sukuk (Islamic bonds) and gold.
Customization
Investors have the flexibility to create customized portfolios by selecting a custom asset allocation. This allows for a mix of equities, Sukuk, and gold, catering to individual investment preferences. Additionally, the option to create more than one portfolio is available, which can be useful for those saving towards different goals.
Automated Management
Wahed Invest handles the day-to-day management of portfolios, including periodic rebalancing, dividend reinvestment, and other administrative tasks. However, it is worth noting that in 2022, the SEC fined Wahed Invest for failing to periodically rebalance portfolios as claimed, though the platform continues to improve its services.
Fees and Accessibility
The platform charges a small annual fee based on the investment balance, ranging from 0.49% to 0.99% depending on the amount invested. There are no hidden, rebalancing, or transaction fees. The minimum investment required is $100 or £100, making it accessible to a wide range of investors.
Tax and Account Options
Wahed Invest offers various account types, including taxable brokerage accounts, traditional or Roth IRAs, SEP IRAs, and Stocks & Shares Individual Savings Accounts (ISAs) in the U.K. The platform provides annual tax certificates to help investors with their tax returns, though it does not offer tax advice.
Functionality
Account Setup
Opening an account with Wahed Invest is straightforward and can be completed online in minutes. Investors fill out a risk assessment questionnaire, and based on their answers, a recommended portfolio is suggested. After completing the registration forms and transferring funds, Wahed Invest manages the investments according to the chosen portfolio.
Technology and Support
Wahed Invest leverages advanced digital technology to streamline the investment process. The platform is mobile-focused, with an app that simplifies the investment journey. It also ensures that all investments are monitored and periodically rebalanced to maintain optimal portfolio performance.
Conclusion
Wahed Invest provides a unique and comprehensive solution for those seeking Sharia-compliant investment options. With its automated portfolio management, customizable portfolios, and adherence to Islamic financial principles, it offers a seamless and ethical investment experience tailored to individual risk profiles and goals.