When seeking to align his faith with his profession, Samim Abedi made a bold career move. Originally, Abedi thought he had reached his aspiration apex managing a corporate investment portfolio at Google, but Abedi decided to leave his job in pursuit of a position that was both professionally and spiritually gratifying. Choosing to join a new company called Wahed Invest, Abedi found a way to continue doing what he loved while pursuing beliefs he held dear.
Wahed Invest, launched in July of 2019, is an exchange fund which incorporates faith-based principles. While it was the first one to align with Abedi’s Islamic values, it isn’t alone. Wahed Invest is one of 11 in the United States that prioritizes religious ethics when adding new clients to its portfolio.
An exchange-traded fund, or ETF, is the partial ownership of a portfolio assembled by professional managers. They are shares in a company which can be sold or traded, and are combinations of the potential benefits of stock, mutual funds, or bonds. The goal of religious exchange funds is to provide customers with the opportunity to invest their money in companies which align with their faith-based beliefs.
Abedi, now the global head of portfolio management at Wahed, expressed the common practice amongst all religious-based firms, to strive for ethical investing in an interview with Bloomberg Businessweek, “We’re all trying to solve the same question, how do we invest our wealth in ways that align with our ethics?”
ETFs such as Wahed began to surge in popularity in recent years as there has been an uptick in responsible investing. Funds which can be categorized as “responsible” fall under the categories of environmental, social, and governance – otherwise known as ESG’s. Globally, ETF assets under the ESG category have reached more than $10 billion in the past year. As was reported by Bloomberg, there are approximately $1.9 billion globally in equity-based religious and exclusionary ETF’s.
The recent surge in responsible investing has opened up the market for firms seeking to provide specific and unique services for select clients. Abedi’s fund, called Wahed FTSE USA Shariah ETF, works exclusively with companies whose businesses are compliant with Arabic law. It is traded under the ticker HLAL, which is in reference to the Arabic word “halal”, meaning “permissible”. By following an index of companies compliant with their ethics, Abedi and his team at Wahed ensure their clients are investing in businesses which share their ethical agenda.
The rules and regulations which categorize a company as “compliant” in this space are subjective, particularly because of the different religion-focused firms prioritizing different ethical principles. The Christian based fund Timothy Plan also screens for new investments based on Christian values. While no two firms in this space are exactly alike, they all share the goal of providing responsible and ethical investment opportunities. When summarizing his company’s investment philosophies, Timothy Plan founder Arthur Ally told Bloomberg, “We refuse to invest in companies that are pursuing an unholy agenda.”
Companies such as Wahed and Timothy Plan have quickly gained traction and have found success as they provide support for many looking to be ethically-responsible with their money. While the primary goal at Wahed is to be true to Islam, Abedi reported that they market to people of all faiths who may also appreciate screens against gambling, tobacco, or weapons. This philosophy has proven to generate considerable revenue as Wahed’s ETF has accumulated $35 million in revenue since launching.
Through partnering with companies that appeal to specific religious values, Wahed and Timothy Plan have provided legitimate avenues for their clients to invest in businesses while keeping their faith top of mind.