New Islamic robo-adviser looks to attract US investors

A new Islamic robo-adviser is gearing up to make its market debut to provide Shariah-compliant investing to millions of investors in the U.S. that are underserved with options to align their finances with their values and beliefs. 

The fintech startup, Aghaz Investments, was founded in January by CEO Khurram Agha and is currently launched with a private group of testers on an invite-only base, Agha said in an interview. The robo-adviser already has more than 200 investors on its waitlist looking to join the platform and is expected to announce a public launch by November.

The fintech will simultaneously launch its mobile app on Google and Apple iOS, according to Agha. Aghaz Investments has set a minimum investment of $1,000 with a fee structure at 0.49% annually and a $2 per month subscription fee, according to its website. 

“Why, I question, should 5.8 million U.S. Muslims be at a disadvantage relative to our peers when it comes to investing and saving for our goals, just because for many of us, many of the existing solutions do not work,” Agha wrote in a LinkedIn post. “Maybe bonds and fixed-income are out of scope for some of us, but why can we not harness technology, data and modern financial frameworks to create optimal solutions that, instead, do work for us.”

The firm enters the market facing competition with Wahed, a New-York based Sharia-compliant digital investment platform that had raised $25 million earlier this year to expand into the Middle East and North Africa, according to the company’s website. It currently has more than 100,000 clients globally.

Investor appetite for ESG-based investing has been trending this year amid a confluence of social, economic and market factors. In fact, global assets are expected to surge to $53 trillion by 2022, according to a Celent analysis.

Once launched, Aghaz investors can create 10 value-based investment goals and will have access to see the construction of their portfolios by how much is invested in stock versus assets like gold or sukuk — a publicly traded Shariah-compliant instruments equivalent to bonds. 

The startup notes on its website that all its portfolios are certified and audited by IdealRatings based on standards developed by Accounting and Auditing Organization for Islamic Financial Institutions, a not-for-profit that maintains and promotes Shariah standards for Islamic financial institutions.

Moreover, Aghaz excludes all companies whose core businesses involve or serve interest-based products, heath or mind-altering products, betting and gambling operations, pork and non-halal foods, human genetic manipulation and any other non-Shariah compliant businesses. 

In September, the startup raised $400,000 in pre-seed funding. While the initial launch is targeted for the Muslim investor, the fintech will soon produce a custom values product for non-Muslim investors as well, according to the website. 

“You choose whatever values are important to you and we will construct investment portfolios in accordance with those values,” according to the website. “Whether you are a Muslim, or a standard ESG based or other values-based investor, you will find Aghaz suitable.”