For decades, the word “halal” was associated with food and beverages. Rarely was it applied to the finance, fashion, and cosmetics industries. However, with the Muslim spend estimated at USD$2.1 trillion in 2017, the Islamic economy is at a steady incline, and more companies are taking note. One of the main focuses is the financial industry. For a long time, people did not consider Shariah compliance when investing, even though, the Holy Quran mentions the importance of building wealth the halal way: O ye who believe! Devour not interest, doubled and multiplied; but fear Allah; that ye may (really) prosper.1
For Muslims and non-Muslims alike, there are benefits to halal investing.
1. Less Exposure to Risk
Scholars find that Islamic markets are more immune to global shocks and crises, owing to low leverage effect. Less diverse field portfolio, on the other hand, are more prone to vulnerability during unstable economic times.
2. A Socially Responsible Approach
Globally, investors are seeking ethical “green” opportunities which lead to minimize environmental damage and protect human rights. Halal investing tunes in to the needs of Muslims and provides options for socially responsible investments in the portfolio.
3. No compromise on returns
There are many ways to grow your wealth the halal way. Choosing to be a halal investor does not mean you need to compromise on investment returns. One way to start is through platforms such as robo-advisors. These platforms are easy to use, have proprietary technology, and helps clients maximize their returns
In today’s world, more companies are recognizing that there is a gap when servicing the Muslim population. In the USA, Wahed Invest is the largest halal investing platform by client count. Our platform leverages automated trading techniques and has been benchmarked against global players such as Betterment, and Wealthfront.