Shariah compliant financial services may not be part of the US’s mainstream consciousness; however, this has not deterred value-driven financial institutions and fintech start-ups from serving this niche yet steadily growing market. IFN Fintech shines the spotlight on the latest entrant to the US’s Islamic finance arena, a robo-advisor targeting the ethical and religious-conscious market.
Based in San Francisco, Newday Impact Investing is a digital investment platform established upon the ideal of democratizing access to values-based responsible investing thereby directing capital to organizations that are contributing to helping the world.
“The question that we were asking ourselves was: ‘What is the impact that we could have if we are able to unleash the younger generations’ vigor for deep and lasting change by providing them a mechanism for engagement that’s more grass roots, allowing them to share their collectivized desire to change the world?’” mused Doug Heske, CEO of Newday Financial Technologies, the parent company of Newday Impact Investing. “We are offering a tangible, technology-enabled, accessible software solution enabling everyone to participate in actualizing their objective of aligning financial investments to values and social impact. The simplification of engagement in this process alone speaks to what is much needed in the marketplace.”
About to celebrate its third anniversary this June, the robo-advisor has managed to build its platform community to over 9,000 active users, with 3,000 accounts demonstrating over 20% monthly growth rates. It offers 15 portfolios including the latest three, rolled out this week, which paved the way for it into faith-based investing: Magni Halakhic portfolio, Islamic Stewardship portfolio and Magni Catholic Values portfolio. These three portfolios, previously only accessible by institutional and accredited investors, have been made available to the mass market through Newday Impact Investing’s online platform and is a result of a partnership with Minneapolis-based Magni Global Asset Management.
“The Islamic finance market is a critical market for us to address. The Islamic faith is the second-largest in the world with over 1.8 billion followers or 24% of the world’s population. Of equal importance is that ESG [environmental, social and corporate governance] and Islamic finance are very much complementary with many shared principles including being good corporate stewards to society and protecting the environment,” Heske shared with IFN.
ESG is built into Newday’s DNA, which resonates with the principles of Islamic finance. Its current strategies comprises Global Impact Equity, Global ESG Active Engagement Fossil Fuel Free, Climate Action, Ocean Health, Clean Water, Animal Welfare, Sustainable Agriculture, Nia Gender and Inclusion, Great Places to Work, Stakeholder Capitalism, Sustainable REIT, Global Dividends and two fixed income strategies.
The firm has also developed its own proprietary set of analytics enabling it to conduct measurement and ratings on over 8,000 companies worldwide, 118,000 public entities and 2,000 funds. The data collected is utilized to generate stronger alpha and drive deeper impact in the firm’s investments, but is also packaged and distributed as a statistical analysis software product to other financial institutions.
Balancing the triple bottom line, or people, planet and profit, Newday is focused on building an ecosystem around its platform, allowing it to “cull investment from within that ecosystem and harvesting it for change” in the words of Heske. To that end, the platform has aligned itself with a group of non-governmental organizations (NGOs) such as Surfrider Foundation, the Global Fund for Women, Water.org, the Elephant Cooperation, Conservation International and the Caux Roundtable, among others. It has committed to investing 5% of the revenues on each of its investment strategies into these non-profits to support their work. It is also worth noting that Newday is a certified B-Corp, meaning its business meets the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.
“Our approach in working with NGOs across various issues in impact, allows us to approach the marketplace in a more authentic fashion. The power of contribution aligned with investing is what we view as the tipping point for growth that has not yet been done,” said Heske.