Wahed FTSE USA Shariah ETF (HLAL)

ETF Wahed FTSE USA Shariah ETF Overview

Profile:

• Focus: The ETF invests in US large and mid-cap companies that comply with Shariah principles. This means avoiding investments in sectors such as alcohol, gambling, and pork products.
• Asset Allocation: Primarily invested in equities (stocks) of companies compliant with Shariah principles.
• Investment Strategy: Passively tracks the FTSE USA Shariah Index, which includes US companies that meet specific Shariah-compliant criteria.

Objective:

• To provide investors with a diversified exposure to US equities while adhering to Shariah principles.

Issuer:

• Name: Wahed Invest
• Reputation and Reliability: Wahed Invest is a relatively new company founded in 2015. It has a strong focus on serving the Muslim community and offers various Shariah-compliant investment products.
• Management: The management team has experience in finance and Islamic finance.

Market Share:

• Market Share: The ETF has a small market share within the broader US equity ETF market.

Total Net Assets:

• Total Net Assets: As of October 26, 2023, the ETF has approximately $45.8 million in assets under management.

Moat:

• Shariah Compliance: The ETF caters to a specific niche market of investors seeking Shariah-compliant investments.
• Passive Management: The passive management approach results in lower fees compared to actively managed funds.

Financial Performance:

• Historical Performance: The ETF has delivered positive returns since its inception in 2017. However, performance may vary depending on market conditions.
• Benchmark Comparison: The ETF has generally performed in line with its benchmark index, the FTSE USA Shariah Index.

Growth Trajectory:

• Growth Potential: The growth potential of the ETF is tied to the overall performance of the US equity market and the increasing demand for Shariah-compliant investments.

Liquidity:

• Average Trading Volume: The ETF has a moderate trading volume, indicating reasonable liquidity.
• Bid-Ask Spread: The bid-ask spread is relatively low, suggesting minimal transaction costs.

Market Dynamics:

• Economic Indicators: The ETF's performance can be influenced by factors like economic growth, interest rates, and inflation.
• Sector Growth Prospects: The ETF's performance is tied to the performance of the US equity market, particularly large and mid-cap companies.
• Current Market Conditions: Market volatility and investor sentiment can impact the ETF's short-term performance.

Competitors:

• Key Competitors: iShares ESG Aware MSCI USA ETF (ESGU), Vanguard FTSE Developed Markets ETF (VEA), SPDR S&P 500 ETF (SPY).
• Market Share Percentages: These competitors have significantly larger market shares within the US equity ETF market.

Expense Ratio:

• Expense Ratio: The ETF has an expense ratio of 0.50%, which is considered relatively low compared to other actively managed Shariah-compliant funds.

Investment Approach and Strategy:

• Strategy: Passively tracks the FTSE USA Shariah Index.
• Composition: Primarily holds large and mid-cap US equities compliant with Shariah principles.

Key Points:

• Shariah-compliant investment option for US equities.
• Passively managed with low fees.
• Moderate liquidity and reasonable bid-ask spread.
• Exposed to overall US equity market performance.

Risks:

• Market Volatility: The ETF's value can fluctuate based on market conditions.
• Sector Risk: Focused on US equities, leading to potential concentration risk.
• Emerging Manager: Wahed Invest is a relatively new company with limited track record.

Who Should Consider Investing:

• Investors seeking Shariah-compliant exposure to US equities.
• Investors comfortable with moderate risk and potential volatility.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI:

• Rating: 7.5 out of 10
• Justification: The ETF offers a unique Shariah-compliant investment option with a low expense ratio and decent historical performance. However, its small market share, limited track record of the issuer, and exposure to market volatility are factors to consider.

Resources and Disclaimers:

• Data sources: ETF.com, Wahed Invest website
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.