Robo-advisory platform Airo Malaysia recently launched its Shariah compliant portfolio to fulfil the increasing demand for investments aligned with Islamic principles.
Airo has three Islamic portfolios: conservative, balanced and growth. CP Global Fintech Solutions, the company behind Airo, has engaged Tawafuq Consultancy as its sole Shariah adviser.
Airo’s Halal portfolios include global Shariah compliant stocks, Sukuk, exchange-traded funds, global Shariah compliant exchange traded commodities, and Islamic mutual funds.
“Since the Shariah portfolios were incepted (soft-launched) in November last year, they have shown promising initial performance, underscoring the effectiveness of our Shariah compliant investment strategy. Direct comparison with our conventional portfolios is challenging due to fundamental differences in investment strategies,” Sho Toh Yih Jang, CEO of Airo, tells IFN Fintech.
He observes that while Airo’s Shariah portfolios are structured around a long-only investment approach, its conventional portfolios employ a more complex strategy that includes leveraging long and short positions.
“Our commitment to launching the Islamic portfolio stems from recognizing the growing interest in ethical and responsible investing, which aligns closely with the principles of Shariah compliant investments. These portfolios not only adhere to Islamic financial principles, excluding investments in businesses involved with interest, uncertainty, gambling, and other prohibited activities, but also embody a broader appeal for ethical investment,” says Sho.
Moreover, the uniqueness of Airo’s Shariah portfolios lies in their global investment focus, powered by its proprietary investment strategy. This approach fills a gap in the robo-advisory space for Shariah compliant investments while providing steady financial returns, he says.
“Our Islamic portfolios represent a strategic extension of Airo’s offerings, to meet the needs of a diverse investor base looking for niche, ethical investment solutions in a digital-first format,” adds Sho.
As Airo’s Shariah compliant portfolios are still in the early stages of monitoring incoming investments, it might be premature to quantify this interest in precise financial terms.
“Nevertheless, we are cautiously optimistic about the performance of our Shariah compliant portfolios in the upcoming period. This is partly based on the anticipation of central banks reducing interest rates, which historically benefits equity markets. However, we recognize that interest rate cuts are among several factors influencing market performance,” adds Sho.
Airo’s investment strategy includes investing directly in shares listed on the US stock market. A main reason is that US shares are highly liquid, which reduces the risk of market manipulation.
At present, Airo does not have immediate plans to expand its Islamic investment product offerings. It is focused on enhancing and perfecting its existing Shariah compliant portfolios to ensure they meet and even, exceed the investment goals and ethical expectations of their clients. For now, Airo will keenly monitor market developments and investor preferences closely, which may result in the potential introduction of new Islamic investment solutions in the future.