InvestmentIslamic Finance

Wahed Invest – A Detailed Review And How to Use It

Wahed is an online sharia-compliant investing platform that allows you to invest in one of 6 pre-set investment porfolios ranging from “very aggressive” to “very conservative”.

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Wahed is fundamentally not investing in a novel way: it invests in familiar and trusted investment options: (i) halal equity funds; (ii) sukuk (Islamic bonds); and (iii) gold. This is not a bad thing. It means it isn’t like the whole host of other rather dubious Islamic investment options out there, why it has attracted the backing of prominent scholars such as Sh. Yasir Qadhi, and raised $20m in venture capital backing.

What is novel about Wahed however is that it is the first company that:

  1. packages the whole combination of investment assets together;
  2. offers a sharia-compliant platform within an ISA tax-efficient wrapper;
  3. charges lower fees than you would get charged otherwise
  4. allows you to access certain assets that you wouldn’t otherwise easily get access to (e.g. sukuk and emerging markets); and
  5. enables you to get going with just £100 and lets you withdraw/deposit without cost whenever you want.

Don’t get me wrong, there are other places you can do one or more of the above, but there’s none that we’ve come across that let you do all that in one place and through a relatively slick online user interface. Surprising I know – but sadly the Muslim fintech space is still catching up to the mainstream market!

Wahed is not perfect of course. It is a start-up that is growing fast, and with that come inevitable growing pains and having to stretch internal resources to capacity – which can occasionally have an impact on customer service. This is something that we’ve seen them improving and actively working on, and we expect further progress in the coming months. Another annoying thing is that you can’t just fund your account using your card. You have to deposit using your bank, which adds a little delay and an extra step you have take. Again, this is something I think they will sort as they scale bigger.

In this article we thoroughly stress-test Wahed’s numbers and claims as well as the overall experience and alternative options available.

Before we dive into the full review, a quick note:

Like other comparison websites, IFG pays its bills through referral fees. So if you use this link to invest in Wahed you get a £25 bonus on signing up which you wouldn’t otherwise and supports our journalism. Our views and coverage remain strictly independent. 

The sections of this review are:

  • What can you invest in using Wahed?
  • Is it cost-effective and competitive?
  • How does the Wahed Platform work?
  • How best can I use Wahed?

What can you invest in using Wahed?

Wahed is akin to a brokerage platform or a financial adviser in that it doesn’t invest money into its own funds. What it does do is it allocated your money across a variety of other funds that you can buy (more on whether you should just buy these directly below). The main funds/instruments it invests in are the below.

Global Equities:

  1. iShares MSCI World Islamic UCITS ETF USD (Dist)
  2. HSBC Islamic Global Equity Index GBP IC

Emerging markets:

  1. iShares MSCI EM Islamic UCITS ETF USD (Dist)

Sukuk:

  1. Franklin Global Sukuk Fund W(Qdis)

Gold:

  1. ETFS Physical Gold (GBP)

These are all basically pooled funds where the money is invested into a variety of stocks and shares (for instruments 1-3), sukuk (instrument 4) or straight-up no-nonsense gold (instrument 5). The pooled approach gives you the benefit of a diversified portfolio with relatively little investment (something you wouldn’t be able to cost-effectively do if you tried to actually buy all the underlying stocks/sukuk in each of the funds). So when you invest with Wahed you’ll end up indirectly holding potentially hundreds of underlying stocks and shares, sukuk and, of course, some gold.

Is it cost-effective and competitive?

This is the big question. Wahed even has an FAQ on “why wouldn’t I buy securities suggested by Wahed directly?” Their answer is:

While you may be able to buy the securities suggested by Wahed directly through your broker, you may not be able to get them all at the same time in a cost-effective and efficient manner. In addition, some brokers may require a high minimum investment to open an account. Wahed’s service also monitors and facilitates the periodical rebalancing of your portfolio at no additional cost.

More importantly, you may not be able to open and monitor an account in the same seamless manner as you do with Wahed. With Wahed’s advanced technology, you can open an account online and in minutes and get access to global markets.

But let’s test that.

Can I buy the securities in one place at another major broker?

In short, no. Not any mainstream ordinary-person broker anyway.

I looked at Hargreaves Landsdowne and IG.com, two very large and reputable online brokers in the UK. The far column of the table below highlights up which instruments I could easily purchase through them. Importantly I couldn’t purchase global equities and sukuk funds – which for me are quite important (but more on that later).

Instrument Costs and Charges Easily available elsewhere?
iShares MSCI World Islamic UCITS ETF USD (Dist) 0.6% Yes
HSBC Islamic Global Equity Index GBP IC 0.53% No
iShares MSCI EM Islamic UCITS ETF USD (Dist) (0.85) 0.85% Yes
Franklin Global Sukuk Fund W(Qdis) 1.1% No
ETFS Physical Gold (GBP) 0.39% Yes

So Wahed passes test 1.

Can I buy the securities in a cost-effective manner elsewhere?

In short, not really. However, as you become a larger investor (>£250,000) then you should reassess the market carefully for a better deal as you may find one.

So how does Wahed’s fee structure work? Well for the UK it is as follows (for someone like me who has invested below £250,000):

So for the year, I’m looking at 1.92% all in (0.16% x 12) which I’ll be paying.

So the question is, can I beat that going elsewhere?

I’ve picked a couple of instruments from the ones Wahed offered and ran them through Hargreaves Lansdowne.

Here is a snapshot from Hargreaves Landsdowne on the costs associated with you investing in “iShares MSCI EM Islamic UCITS ETF USD (Dist)” through them:

Here is another snapshot for “ETFS Physical Gold (GBP)”:

So lets say for the sake of argument that Hargreaves had all 5 instruments offered by Wahed and we are going to create a like-for-like portfolio over 5 years investing £3000.

HL would charge per annum:

  • HL management fees: 0.45% [£67.50 over 5 years]
  • HL transaction fees: £120 (each instrument will need to be bought and sold once, and there’s 5 of them. One trade costs £12.)
  • HL: Fund costs – these are the same so I won’t analyse these.

HL total over 5 years: £187.50

Wahed would charge per annum:

  • Wahed management fees: 0.99% [£148.5 over 5 years]
  • Wahed transaction fees: £7.50 [£1.50 per year for 5 years]
  • Wahed Fund costs – there are the same so I won’t analyse these.

total over 5 years: £156

So on test 2 Wahed also passes.

However, do note that if you are a high net worth and looking to invest in excess of £250,000, this whole analysis needs to be rerun, because then, the transaction fees (which is where Wahed steams ahead of others at smaller scales) will make up a relatively small percentage as it will stay fixed for Hargreaves at £12 but go up for Wahed as it is a percentage amount. So numerically, £120 is a tiny fraction of £1m, while it is a large fraction of £100. However 0.05% of £1m is  £500 – which is what the Wahed amount would be.

Can I open an account with just £100?

In short, not really – however I do caveat that I have only analysed for two big brokers. I am sure there will be others (though not sharia-compliant) who will allow you to invest for less.

The minimum amount to open an HL Fund and Share Account is just £1, however the minimum lump sum investment into a fund is £100. Direct Debits can be set up from as little as £25 per investment per month. So if you want to invest in 5 funds, you’ll be looking at a minimum starting amount of £500.

For IG, there is a minimum investment of £500 for each portfolio you create. IG will not invest any funds into your portfolio until you have deposited at least £500.

Does the account automatically update/rebalance with competitors?

In short, yes.

Both IG and Hargreaves have their own versions of managed portfolios. IG has its Smart Portfolio while Hargreaves has its Portfolio+.

There are a number of other investment managers who provide this service as well, so here Wahed is not unique.

How does the Wahed platform work?

I set up with Wahed pretty quickly and painlessly a few months back. Like any investment company Wahed need to run background checks on you once you have input your information and before you can deposit money with them. This took about a day or so, then I could invest. I, being a classic customer, took a while before I actually put in the money a few months later. In that time I received a couple of calls from the USA from Wahed’s head office, politely asking if I needed help and reminding me that I could invest whenever I wanted to. I thought this was quite a nice touch.

When I did get ready to put my money in, I was quite surprised to find that at the moment you have to make a bank transfer to Wahed, which for me took about 1-2 business days. I am sure Wahed will sort this out in the coming months – but that’s something that can definitely improve.

The other query that went through my mind was when I was asked to transfer to Wahed’s account, their bank details were listed on the website for me to use. Admittedly it looked like there was some strong encryption, but as a solicitor, I do get a bit nervous of hackers who could swoop in, change a few digits in the account number and my money ends up going elsewhere. But my money did ultimately end up in the right place and to be fair to Wahed, major brokers also list their account details if you want to make a bacs payment.

Once my money hit the Wahed account they sent me an email confirmation and said it would now take up to 5 business days before my money actually got invested. Again, this is not a big deal in the bigger picture, but I am used to large brokers who invest you into whatever you buy pretty much straight away. As Wahed grows, I can see this delay being reduced.

The actual back-end user interface for a logged-in customer is great. There’s a great big graph which shows you where your money is, and a breakdown of the fees, together with a monthly fee amount which is pretty easy to follow.

I tried to work out if I could set up a direct debit to automatically invest a certain amount every month – but unfortunately I couldn’t find the information easily.

UPDATE: Since this article was published Wahed have subsequently been in touch and helpfully explained that you can click on a link to set up a standing order on the page where you fund your account. They also added that an individual can set up multiple accounts under their name (e.g. for their children) – which is helpful to know. You could perhaps try out multiple strategies using different accounts.

Pros:

  • getting a personal call is a nice touch and you can talk through any queries you may have
  • simple user interface which is relatively painless to use
  • an ISA wrapper is great as it means you pay no tax on profits (as long as you don’t put more than £20k in a year)
  • my money got to where it was meant to and the logged-in customer portal is really slick

Cons:

  • Getting calls from the USA can make one jumpy
  • The inability to fund through debit/credit/Paypal and the subsequent delay that ensues
  • The delay in getting my money invested into the portfolio itself

How best can I use Wahed?

Really this depends on you and your personal financial circumstances and investment goals.

For me, I like to do my own investment when it comes to stocks and shares, and Mohsin and I have been pretty successful alhamdulilah over the last few years (averaging over 20% per annum) so we’re happy to put in the time to do that.

So for me, giving my money to someone else to invest for me into a fund doesn’t seem that appealing. But for me, Wahed is still appealing because it gives me access to sukuk and global markets. Sukuk are not easily accessible and I want to have an element of fixed-income returns to my portfolio – so Wahed’s ultra-conservative portfolio is a good way of getting access to a good chunk of sukuk investment. Right now the ultra conservative portfolio is down – but that is a red herring as they would be down when equities are up, and will do better when equities go down. I have bought it as a hedge so can live with a relatively weaker performance.

Global equities I can get access to through my usual brokers, but global equities are a bit trickier to invest in when doing so in bulk. There are tax and regulatory regimes to grapple with and you may not be able to get easy access to those markets. So, again, a little bit of global equities through Wahed is a nice bonus.

But for most people I would imagine some of the other portfolios are also quite appealing, given their successful track record. Use our investment checklist to get started on thinking about what your investment objectives and risk appetite is – and remember to use this link to set up an account – you get £25 as a bonus and support our journalism.

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18 Comments. Leave new

  • Salaam,

    Excellent post ma sha Allah.

    One point I thought I’d add is that Oasis sukuk is available on HL. (No, I don’t get commission!).
    Another is that Wahed is a Muslim-specific product so we should try and support it!

    Reply
    • That’s helpful Umar, jazakAllah khair. We’ll do some more digging on this.

      Reply
    • I would also suggest looking at at Oasis charges (higher than the ETFs) and compare historic performance (lower than comparable ETFs).

      Reply
      • Agree on the Oasis Equity Funds and looking at charges vs ETFs.
        Regarding the Oasis sukuk, there are no sukuk ETFs to compare to!

        Reply
  • Unfortunately, I had really bad experience with Wahed investment. They are quite slow in my experience and I’ve been waiting for more than a month to get my money back. I wasn’t able to deposit money easily and I have stopped my ISA transfer to them because of that. Hopefully they would improve in the future but they should not expect people to invest if it is hard to do so and it takes 30+ email conversations with multiple agents and still no progress!

    Reply
    • Sorry to hear that Faisal – I’ll pass this message along. This is one of the challenges for Wahed – as they are a very promising young start-up that is having to deal with enormous scaling very quickly.

      Reply
    • Hi Faisal,

      We always appreciate and consider our client’s feedback. Our customer support team have been in regular contact with you in regards to the concern. Rest assured your issue is a top priority for us and our team is working to rectify it. Due to certain circumstances beyond our control, there have been delays that we had not envisioned. However, we are sympathetic in the delay of resolving this and we strive to deliver the best for all our clients. For more information, please call or email us.

      Thanks,
      The Wahed UK Team
      +44 (0) 808 169 6662
      [email protected]

      Reply
  • Assalaamu alaikum,

    Could you do a comparison with AJ Bell, their charges for transactions are £9.95 and management charge of 0.25% (max £7.50) on ISAs with all the ETFs mentioned available.

    Thanks,
    Ali

    Reply
  • Hi, I just learned about Wahed investing, for about a year now, I’ve been curious about investing, but i’ve never got the right response from anyone that is truly a Muslim and knows about halal earnings and stuff.
    For some reason I wanted to ask you, since you’re a muslim and I read about this article ( see, always looking for my answer about Halal investing if it actually exists), and I wanted to ask you that, is it halal if we invest in stock or gold or anything online, and then we’ll get fees and interest? is it halal if we’d get fees and interest, could you please explain it to me cause I really don’t have much knowledge exactly how stocking and investing truly work, but I’m interested in them, but afraid if it is haram or something :(, May Allah reward you, thank you a lot 🙂

    Reply
    • Mohsin Patel
      June 14, 2019 9:59 am

      Hi Dayana,

      The returns you get from investing in halal investments are not interest, they’re a profit-based return. E.g. if you buy a house for £50,000 today and it is worth £70,000 in the future, that is simply profit (not interest). Similarly, if you bought shares in a company for £2.00 each and they were worth £3.00 each in 5 years, this is also profit, not interest. Dividends paid by companies are a profit-based return, not interest.

      I hope this makes sense. Please feel free to check out our halal investing section (www.islamicfinanceguru.com/halal-investing) for further content you might find useful.

      Reply
  • Mohammed Akram.
    June 16, 2019 3:26 pm

    i am looking for Hilal investment.

    Reply
  • Salaam Ibrahim,

    Interesting to hear that you are averaging 20% returns a year. Just wondering what strategies you employ in your portfolio, in particular:

    1) Are you running a concentrated portfolio of individual companies or have a mixture of ETFs and individual stocks?
    2) Are you focused on dividends, growth, momentum or a combination?
    3) What percentage of your portfolio is invested in UK equities compared to US and other regions?
    4) What percentage of your portfolio is in equities, compared to other asset classes such as sukuk and gold?

    I listened to one of your millionaire Muslim podcast episodes a while back where you guys talked about “The Zulu Principle” by Jim Slater. I did go onto read this book shortly afterwards and some of the ideas/strategies discussed in the book does make sense. So my fifth question would be:

    5) Do you employ the PEG ratio?

    Sorry for the long list of questions I am currently running a concentrated portfolio of individual stocks with one shariah compliant ETF (ISUS) which gives me some diversification into the US market. However, I do think that averaging returns greater than 12% a year is not sustainable in the long run and am seriously contemplating selling my individual holdings at some point and moving over to index investing via low cost shariah compliant ETFs. Interested to get your take on this.

    Reply
    • Ibrahim Khan
      July 29, 2019 11:31 pm

      Salaam Amjad

      We run a fairly concentrated portfolio of individual companies (though we have a minority of our p/f in funds too (Wahed). We are focused on growth mainly, wiht a little dividends if possible. The majority of our p/f is in the UK. I would say 90% that is invested is in equity. But to be fair, a decent chunk of the overall p/f is currently liquid due to personal reasons.

      We don’t religiously apply the PEG ratio, but we do consider it as part of our overall analysis.

      I agree that averaging over 12% is difficult, especially when it is not a bull market. We are not on course for a 20% return this year for example – which is natural given the downturn, but we are still outperforming the market.

      There is nothing whatsoever wrong with taking the low-cost ETF approach. That will likely get your near enough the same kind of results in the long-run.

      Reply
  • As salamu alikum

    This is a really useful article.

    I’m new to investing . Is there a guide or tips you can recommend on beginning with investment.

    Keep up the good work.

    Kind regards

    Reply
    • Ibrahim Khan
      July 29, 2019 11:28 pm

      Salaam Shahid – I’d suggest that you check out our investment checklist in our resources section. That’s a great place to get started on your investment journey and contains a bunch of tips and tricks.

      Reply
  • Muhammad Khan
    August 7, 2019 11:09 pm

    Assalamu alaikum,
    This is an excellent article. I’m in the US, but could you possibly do a follow-up analytical article or an edit to this one since Wahed has now launched its own ETF (HLAL) and has also changed the fee structure (according to their new wrap brochure)? I’m wondering why I would use Wahed when I can just invest in HLAL anywhere else, and if there are any halal US-based ETFs out there with better performance/lower expense ratios. I’d like to average ~20% as you guys are and inshaAllah will continue to do.
    JZK and regards,
    Muhammad

    Reply
  • You mentioned that we could open more than one GIA, but I tried opening a 2nd one but they rejected my request.

    Reply

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