New York-based Wahed Invest has listed its first exchange-traded fund (ETF), the Wahed FTSE USA Shariah ETF (HLAL US) on NASDAQ, a milestone feat for any Shariah robo adviser.
Screened by Yasaar, HLAL US is a collaboration with US Bank’s Lifted Funds Trust and FTSE Russell and carries an expense ratio of 0.5%. The ETF is benchmarked against the FTSE Shariah USA Index and covers a universe of over 222 certified Shariah compliant large and mid-cap stocks from the FTSE Global Equity Index Series which holds 621 constituents as at the end of the first half of 2019. HLAL US counts Apple, Johnson & Johnson, Exxon Mobil Corporation, Procter & Gamble, and Adobe as some its top constituents.
Similar to many Islamic funds and ETFs which have little exposure to financial stocks, HLAL US does not have any allocation to financial stocks. For comparison sake, 18.5% of stocks housed by its parent universe, the FTSE USA Index, belong to financial institutions, as at the end of June 2019. The Islamic ETF makes up instead with stocks from the sectors of technology (28.6% vs. 22%), healthcare (22.2% vs. 12.7%) and oil and gas (13.1% vs. 5%).
Already a niche asset class, Shariah compliant ETFs are far and few in between with Malaysia and Iran being some of the largest Islamic ETF manufacturers globally. Iran has approximately 30 active ETFs while Malaysia has six that have been issued Fatwa certifying Shariah integrity. The launch of Wahed Invest’s ETF marks the first time an Islamic ETF is being managed by a digital asset manager, breaking away or rather expanding beyond, the conventional pool of traditional investment managers.