Wahed Invest, an Islamic-finance robo-advisory firm based in the US, is launching its automated online investment service in the UK. The firm, founded in 2015 by Junaid Wahedna, a former analyst at Dubai investment bank M Capital, bills itself as the first robo-adviser giving Muslims access to investment funds rated as permissible — or halal — by Islamic scholars. Wahed announced the launch of its UK digital investment platform on August 20 after securing approval from the Financial Conduct Authority.
Mohammed Ibrahim Morshed, head of UK at Wahed, said the needs of the Muslim community had been overlooked for “too long” and many Muslims find it almost “impossible to build nest eggs that are in line with their faith”. While mutual funds that comply with Islamic law, or sharia, are well-established in the UK — HSBC’s Islamic Global Equity Index fund manages $560m and the UK’s public pension fund Nest offers a sharia-compliant option — Wahed claims its offering is the first full-service online investment platform aimed at Muslims. Morshed said Wahed’s platform will mean “Muslim and non-Muslim investors alike can now be completely confident that they are creating portfolios that are ethically sound”.
Robo-advisory firms, a new breed of digital or online-first fund managers that build portfolios of low-cost funds for retail investors, have established a small but important toehold in the UK market in recent years. Their name references their use of automated systems to put funds together in portfolios, saving the cost of human financial advisers.
But they face an uphill struggle against established fund supermarkets. Nutmeg, a robo-adviser founded in 2006, surpassed £1bn in funds under management for the first time in November — but the two largest fund supermarkets, Cofunds and Hargreaves Lansdown, manage £96bn and £86bn respectively, according to industry analyst Fundscape. The FCA is also reviewing competition in the retail platform market. Its interim report, published in July, found a “concentrated” market in direct-to-consumer platforms, with the largest holding a 40% market share.
Source Financial News