Wahed launches first shariah-compliant and ESG themed fund

1/18/2022 10:29 AM

Islamic investment firm Wahed debuts the first Shariah-compliant and ESG-aware (environmental, social and corporate governance) investment fund on the Nasdaq — The Wahed Dow Jones Islamic World ETF.

The group hopes the new fund will allow Muslims, and non-Muslims, to make investments that better align with their faith and values.

The ETF (an exchange-traded fund) started trading last week and tracks an index of companies globally that meet Islamic principles.

The fund's ticker is 'UMMA' — a nod to the word Ummah.

“We believe our new fund provides investors a highly personalized investing experience that is more true to their theological beliefs,” said Samim Abedi, Chief Investment Officer at Wahed.

Ethically and socially responsible

An additional layer of ESG screening is taken into account when constructing the fund, which means it considers how a company takes care of the environment; how it treats its employees, customers and local community; and how it governs its behaviour.

“The line between ethical, socially responsible, and ESG investing has appeared to blur, and we’re excited to seek to provide investors a vehicle to diversify their portfolio with international investments that align with even more of their beliefs," said Abedi.

The ETF will track the Dow Jones Islamic Market International Titans 100 Index, the largest non-US companies in emerging and developing nations that meet specific Islamic finance guidelines.

The company already has an ETF that consists of US companies called HLAL, which grew 28% in 2021.

"The global exposure afforded by UMMA may significantly increase the long-term investment fund landscape for investors who faith-based restrictions may have historically limited," said the group in a statement.

UMMA’s top holdings include Taiwan Semiconductor Manufacturing, Samsung Electronics, and Nestle SA. The IT and healthcare sectors make up nearly 45% of the fund.