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Toronto Wealth Management Firm Goes Halal

Toronto Wealth Management Firm Goes Halal
Michael Katchen, founder and CEO of Wealthsimple, is photographed in the company's Toronto office on April 21, 2016. (Fred Lum/The Globe and Mail)

TORONTO – A Toronto-based wealth management firm has introduced a new halal investing portfolio to engage observant Muslims seeking investments that adhere to Islamic laws.

“With socially responsible investing, people thought it was going to be a such a small niche, that it wouldn’t be worth our time, but it turned out to be enormously successful,” Wealthsimple CEO Michael Katchen told Canadian Press on Wednesday, August 23.

“We now see a third of our clients in socially responsible portfolios. We realized there was an opportunity to create solutions for groups of people that were underserviced in the financial services industry – and in this case, with Muslims who hold certain religious beliefs and really don’t have options when it comes to investments.”

Robo-adviser Wealthsimple said its Halal investing portfolio is designed for those adhering to Islamic laws that prohibit investing in certain companies and financial products.

Katchen said there are only a handful of Islamic-compliant portfolio options available in Canada, some of which he said have “egregiously expensive” management expense ratio fees upward of more than 2.8 per cent as well as high account size minimums.

Wealthsimple’s Halal portfolio will have the same fee structure as its other core offerings, with 0.5 per cent on the first $100,000 invested and no account minimum.

Wealthsimple designed its Halal portfolio with global index provider MSCI, using a methodology approved by its committee of Shari`ah scholars.

Katchen said Wealthsimple will continue to launch new products that introduce solutions for investors who are underserviced or improve upon offerings that are already in the market.

“If you look at our history, we generally try to lead with innovative new products and services a few times a year, so I think you can expect more stuff from us.”

Islam forbids Muslims from usury, receiving or paying interest on loans.

Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

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