How I Made 13% in 6 Months on the Pound Falling – in a Halal Way

Many of you will have seen our detailed review of Wahed previously. As part of that review, I invested £3k into the Wahed ultra-conservative portfolio because I wanted access to sukuk, which I wasn’t able to get anywhere else.

I checked into my Wahed account recently and discovered that the £3k investment made at the end of January is now worth ~£3400 – an increase of approximately 13% in 6 months.

13%! In the “Very Conservative” portfolio. In 6 months. That made me sit up a bit. Something was clearly up.

Why The Fund Went Up

From a more detailed dig into the Franklin Global Sukuk Fund – X (Qdis) USD – the fund that Wahed put my money into, I concluded that a mixture of the following reasons were responsible for the profit:

  1. The Fund is denominated in USD, which is great for me because GBP is currently doing pretty badly against the dollar.
  2. The underlying sukuk that the Fund has bought into are doing well – i.e. they’re paying up on time and increasing in value. This in turn increases the value of the Fund itself.
  3. The Fund pays a healthy 4.67% distribution yield, and dividends are paid out quarterly. These then feed into the overall profits.
  4. The Malaysian and Indonesian currencies in which the Fund receives its income, have strengthened against USD, meaning they give the Fund more USDs when converted.
  5. The sukuk market has become more appealing as sukuk issuance has decreased (at least the type the Fund holds) and the Gulf economies strengthen due to rising oil prices (and so are expected to issue less sukuk), and so the value of existing sukuk have gone up.

I remember at the time of the initial article people questioned why I would put my money into a Fund that has historically not done well, and when the equities funds Wahed offers are doing far better – but my answer then was as it is now: markets are cyclical and it is important to have a significant chunk of one’s assets in fixed income and low volatility asset classes as a hedge against downturns. Sukuk funds are cheaper when equities are flying precisely because equities are flying.

My Strategy Going Forward

Given that I think GBP will continue to remain weak and possibly weaken further as we head to Brexit, and given the Wahed ultra-conservative fund isn’t exactly volatile, I think a nice safe way of doing a little foreign exchange arbitrage is by holding a chunk of my overall portfolio in USD-denominated funds such as the Wahed Invest ultra-conservative portfolio. That’s why I’m investing a further £10k today.

Do you agree with my decision? Interested to hear your thoughts!

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19 Comments. Leave new

  • What is your opinion on the aggressive portfolio on Wahed Invest? Do you think it is a good option for someone who wants to build their wealth over the next 20 years?

  • It’s hardly a “Very Conservative” portfolio for the UK investor when the FX rate can make or break the returns! One for Wahed to think about!

    • Halal much?

    • Ibrahim Khan
      July 31, 2019 9:54 am

      I do agree that FX can have a big impact – but I think given the sukuk market is so global, FX will always be a big consideration. I actually think the bigger FX impact here was the Malaysian and Indonesian currencies strengthening. The dividend was only £70 or so of the £415 gain. The rest was the value of the fund itself.

      • Point I’m making is that Wahed should not be labelling it as “Very conservative”, as that means it doesn’t go up and down much.

        If the FX rate suddenly jumps (due simply to Brexit for example), this sukuk will suddenly drop in line with the FX rate drop. The “very conservative” investor will not be suitably impressed!

        I told them my views anyway – I imagine someone in the US structured their funds like this.

        A very conservative investment could be a UK property investment where the fund/asset value is the market value.

  • Superb analysis and observation. My ISA which I invested ~1 year ago has also returned >10% in a moderately aggressive portfolio. It’s harder to breakdown the components like you have as the reporting is a little limited, but I’ve definitely observed the same upturn via the sukuk

  • My portfolio is currently set to Moderate. I’ve invested for 2 months and I have a return of 2.9%. Considering the annual fee is 1.8% doesn’t that leave me having made only 1.1%?
    Would it be a better idea to change my portfolio to Ultra conservative till the end of the year?

    • Ibrahim Khan
      July 31, 2019 9:56 am

      Best to see how things play out over the long-term. The moderate will outperform the ultra conservative one in the long run in my opinion, given the exposure to equities.

      The annual fee will only be charged once – so best judge returns at least after a year.

  • When you say “Given that I think GBP will continue to remain weak and possibly weaken further as we head to Brexit, ” Do you mean you are making a further investment until the brexit deadline on 31st Oct, after which you will pullout?

    As i think once a decision has been taken on Brexit the pound will look to regain, (which then may cause you to lose?) as weak pound will push country into recession?

    Would love to know your thoughts

    • Ibrahim Khan
      July 31, 2019 2:21 pm

      I am of the view that Sterling will stay weak until a deal is done post-Brexit (with a no-deal scenario exit the most likely in my opinion at this stage). Then the Sterling will rally a little, and slowly creep back up over months and years as Brexit’s impact is properly seen.

      So no, I don’t plan to immediately cash out after October 31st.

  • My portfolio is ‘very aggressive’ and I have made 12% in 6 months. I am thinking about increasing my investment too.

  • Curious why you chose this method to access Sukuk…It seems (much) pricier than say investing in Oasis Global Income via Hargreaves (0.7% for fund + 0.45% platform) which would be significantly cheaper than the 1.92% for the very conservative portfolio in Wahed? Average Joe (or should that be Average Junaid) won’t be getting affiliate commissions to offset this extra cost 😉

    • Ibrahim Khan
      August 1, 2019 6:39 pm

      Jzk khayr for flagging Shahid. You’re right they’re better in rate. We’re just bottoming out a point with them on sharia-compliance at the moment and their methodology around that, but once that’s bottomed out, we’re going to do a full article on them and Simply Ethical (who I found out today have also launched something in this space).

      • Ibrahim Khan
        August 1, 2019 6:40 pm

        also I don’t have a HL account – which isn’t really an excuse I know 😉

      • ASA thanks for the reply. Would be good to read what you find re Oasis funds and their shariah compliance. Didn’t know about Simply Ethical will take a look. Re H-L….I prefer a flat free platform generally but they do provide access to funds not available elsewhere like Oasis (I checked both AJ Bell and Interactive Investor and they don’t offer Oasis funds or the Franklin sukuk fund)

        • AJ Bell do have the Franklin fund but there’s no online quote to actually buy it. I am going to try and speak to them soon about this. A reader got in touch recently to say that Cavendish also have the Oasis funds (I have just checked on their website and they do).

  • How is your investment with Wahed going during the Coronavirus crisis ?
    Do you think that this crisis will have a negative impact on Sukuk market ?

    • Ibrahim Khan
      April 20, 2020 9:21 am

      I had to liquidate a few months back to buy my house. I suspect sukuk markets will do a little better in the medium term due to COVID – but given the wide-reaching impact of COVID – they may also be affected too.


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