Friday, June 18, 2021
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Editor's PickWealthsimple’s US exit: Where does it leave its Halal investors?

Wealthsimple’s US exit: Where does it leave its Halal investors?

Toronto-based Wealthsimple’s decision to divest its US assets may come as surprising to some and strategic to many. Exiting the competitive US market allows the Canadian digital wealth manager to focus resources on building its flourishing business in its home market. But with the acquirer of Wealthsimple’s US book of business not offering any Shariah compliant investment options, where does it leave the Halal investors?

By mid-June, all of Wealthsimple’s existing US-based customers will be transferred to Betterment, a rival company which acquired Wealthsimple’s US business for an undisclosed sum.

Wealthsimple entered the US market in 2017, and while it had phenomenal success in Canada, it found itself competing with local heavyweights such as Betterment and Wealth Front. As at the end of March 2021, Wealthsimple’s assets under management (AuM) in the US reached US$192.24 million, according to filings to the Securities and Exchange Commission, while Betterment amassed US$29 billion in AuM.

Wealthsimple’s clients — both Islamic and conventional — have the option to opt out of the transfer. Unfortunately, Shariah-conscious investors would not have access to Shariah compliant options through Betterment.

“Betterment does not offer Halal portfolios at this time. However, we offer a range of SRI [socially responsible investment] options,” Betterment told IFN Fintech. “Customers wishing to maintain Halal portfolios should work with Wealthsimple to transfer these accounts to a different custodian prior to the transfer date.” While digital investment advisory services are a booming sector, there remains only a handful of Islamic providers. In the US, there are Wahed Invest and Aghaz Investments.

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