Saturday, April 13, 2024
Case StudyFintech start-up Manzil launches Canada's first Halal mortgage fund

Fintech start-up Manzil launches Canada’s first Halal mortgage fund

Canada’s Islamic fintech firm Manzil has launched the country’s first income Halal mortgage fund, an investment vehicle established to meet the investment needs of Muslims in Canada who are largely underserved and excluded from the conventional financial system.

Toronto-based Islamic fintech start-up Manzil’s Halal Mortgage Fund is a fund that invests in Halal mortgages in Canada — in other words, providing Canadians with Shariah compliant mortgages — allowing investors a slice of the profits from the financing payments.

Fund fact sheet
Fund objectives• Empower the Muslim community to get into homeownership
• Provide mortgages on Canadian-only properties with high-quality credit clients with a minimum of 20% downpayment
Target return4% per year
Distribution• Quarterly distributions are paid out as cash or through various distribution reinvestment plan (DRIP) options
• DRIP option helps investors compound overall returns by utilizing quarterly distributions to purchase additional trust units in the fund
• Investments are registered retirement savings plan and tax-free savings account eligible
Listing• NEO Connect Exchange
• DealSquare

Launched at the end of 2019, it is learned that the fund will begin to gain exposure to equity-based investments this year. The Halal Mortgage Fund has gone through ethical and Shariah compliance screening by Manzil’s Shariah board and it is engineered to also respect AAOIFI standards.

Listed on NEO Connect Exchange and Canada’s first centralized platform for private placement offerings, DealSquare, retail customers can invest into the Halal Mortgage Fund through two of its distribution partners — Wealthbar and Fundscrapper.

“The Canadian value of Shariah compliant mortgages in 2017 was estimated at CA$2 billion (US$1.43 billion), of which we have captured CA$300 million (US$214.87 million) on our waitlist, and growing at CA$5 million (US$3.58 million) per week, proving there is a significant demand for Halal financing and investment products. Our partnerships with NEO and DealSquare will give investors the most efficient access to our fund,” Mohammad Sawwaf, CEO and co-founder of Manzil, commented during the listing of the fund.

Table 1: Types of investment schemes for Halal Mortgage Fund
Monthly deposits
Smaller, one-time deposits
Larger, one-time deposits
Minimum investmentCA$1,000 (US$717.41)CA$1,000CA$1,000
Dividend reinvestingYesYesYes
Fees0.38% annual account feeNo annual advisor fee
A flat account administration fee of CA$125 (US$89.68) for first account and CA$75 (US$53.81) for subsequent accounts
No annual advisor fee
A flat account administration fee of CA$125 for first account and CA$75 for subsequent accounts
Source: Manzil

Due to the coronavirus outbreak, the Bank of Canada — like many central banks worldwide — slashed the overnight prime rate three times in March bringing the rate to 0.25%, which meant that variable mortgage rates from conventional banks dropped accordingly, making it cheaper for those who qualify and are looking to borrow.

“We have had two inquiries from potential clients making requests for lower rates from Manzil and after explaining how our funds are not linked to the Bank of Canada, this was no longer a concern. This means that fund investors can expect a higher relative yield as conventional yields continue to decline,” explained Sawwaf in an investor note.

The opinions and viewpoints expressed do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.


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