Wahed Invest robo-adviser expands with new Islamic index funds

(Reuters) - New York-based Wahed Invest has launched two sharia compliant index-tracking funds under its robo-adviser platform, as the firm looks to attract an underserved segment of Muslim retail investors, the company said on Wednesday.

Wahed’s automated investment service is part of wider efforts to introduce new technologies and so-called fintech products in the Islamic finance industry, which has its main centers in Southeast Asia and the Middle East.

Such digital wealth management firms create and manage portfolios made up of low-cost funds catering to affluent but not necessarily very wealthy customers.

The firm hopes to attract a global audience, with offices now open in London, Washington, Kuala Lumpur, Dubai and Mumbai, Chief Executive Junaid Wahedna said via telephone.

“Our end goal is to make every asset class available to Muslim investors. Islamic banks have so far focused on high net worth individuals, everyone has ignored the retail component.”

The new equity funds launched by Wahed will track indices that are screened by Standard & Poor’s to follow religious guidelines that exclude certain business sectors such as tobacco, alcohol and gambling stocks.

The funds have no lockup period and only charge an advisory fee rather than a management fee, which helps keep the product accessible to a wide audience, said Wahedna.

A recurring deposits tool has proven to be popular among clients, most of whom are first-time investors, he added.

Wahed, which raised $5 million in seed capital last year, is backed by Gulf investors and venture firms including Boston-based Cue Ball Capital and Dubai-based BECO Capital.

Reporting by Bernardo Vizcaino; Editing by Himani Sarkar