As much as Samim Abedi loved his job as part of the team that managed Google’s corporate investment portfolio, he couldn’t always square the work with his Muslim faith. He worried that some of the companies whose securities he traded had ties to alcohol or tobacco or gambling.
So he quit to join Wahed Invest, which in July 2019 launched the first exchange-traded fund in the U.S. that’s compliant with Sharia, Islam’s religious law. It’s one of eight ETFs introduced in the U.S. last year that incorporate faith-based principles, raising the total to 11. More are coming: In June, money manager Global X filed to launch a bond fund aligned to Catholic values. “We’re all trying to solve the same question,” says Abedi, the global head of portfolio management for Wahed. “How do we invest our wealth in ways that align with our ethics?”
Religion-based funds can differ on what they consider ethical. A stock fund that caters to Catholics shuns companies that sell weapons or exploit child labor. Several ETFs for Muslims steer clear of anything related to interest-based finance, which the religion frowns upon. Those funds invest in a Sharia-compliant alternative to bonds called sukuk, which provide regular payments that are considered profit-sharing rather than interest.