As someone who’s continuously looking for sustainable, ethical ways to grow my investments, Wahed Malaysia naturally caught my attention.
Wahed stands out as one of the few Shariah-compliant platforms available in Malaysia, offering a range of investment options designed to align with Islamic principles.
But beyond the ethical appeal, I was curious to see how well this platform could cater to my specific interest: investing in the S&P 500.
Through this review, I’ll be sharing my experience testing Wahed Malaysia, focusing on how the platform manages to incorporate S&P 500 exposure in a way that aligns with its ethical standards.
What is Wahed Malaysia?
Wahed Malaysia is an investment platform designed to provide Shariah-compliant, ethical investing options tailored for the Malaysian market. It’s part of Wahed Invest, a global fintech company with a mission to make ethical investing accessible to everyone.
Wahed Malaysia is approved by the Securities Commission of Malaysia, which adds a layer of trust and legitimacy, especially for investors seeking regulated and transparent platforms.
The platform primarily focuses on providing investment options that align with Islamic principles, ensuring that all portfolios are free from interest-bearing and non-compliant sectors such as alcohol, gambling, and tobacco.
Instead, Wahed Malaysia offers investments in a mix of shariah-compliant assets like Sukuk (Islamic bonds), gold, and equity-based ETFs, giving Muslim investors in Malaysia a unique way to grow their wealth in accordance with their values.
Initial Impressions and Onboarding Experience
When I first explored Wahed Malaysia, I was struck by how simple and straightforward the platform appeared. The user interface is modern and intuitive, making it easy for even beginners to navigate.
Wahed places a strong emphasis on transparency and accessibility, which is refreshing in a landscape where investment platforms can sometimes feel complex and overwhelming.
The onboarding process was seamless and didn’t take more than a few minutes.
After creating an account, I was asked to complete a risk assessment questionnaire designed to gauge my investment goals and risk tolerance. This questionnaire is key to Wahed’s approach, as it helps them recommend a suitable portfolio based on individual preferences. I was amazed by their efforts to identify investors based on their preferred investment methods and/or risk appetite!
These are the various portfolio recommendations by Wahed to kick-start my investment journey. I mistakenly chose to invest in gold and found that I couldn’t switch to a U.S. ETF afterward without wasting another 1-2 days. Instead, I had to create an entirely new portfolio to invest in the U.S. ETF, which was a time-consuming process.
Depositing funds into Wahed Malaysia can take 1-2 days and an additional of 1-2 days is required to invest the funds once you have deposited the funds into Wahed Malaysia.
So in total, it would take around 4 days, which is quite long considering you could miss out on potential market opportunities during that time.
The first graph represents my gold investment, while the second graph shows my investment in the Wahed FTSE USA Shariah ETF. I initially invested RM100 in each fund, with unrealised profits displayed as earnings. The charts also offer options to view progress over different time frames – 3 months, 6 months, 1 year, and all-time – providing a clear picture of my portfolio’s performance over time. While it may seem basic to seasoned investors, simplicity of the dashboard is sufficient for beginners. One aspect I appreciated was the clear guidance on fees and potential returns. Unlike some platforms that bury fees in the fine print, Wahed Malaysia lays out its charges upfront, so I knew exactly what to expect.
Investment Options with Wahed Malaysia
Wahed Malaysia offers a range of Shariah-compliant investment portfolios tailored to meet different risk profiles and financial goals.
1. Equity-Based ETFs with U.S. Exposure
One of Wahed Malaysia’s highlights is its equity-based ETFs, which include Shariah-compliant funds offering indirect exposure to large-cap U.S. companies, including many that form part of the S&P 500 such as Apple, Microsoft, Meta, etc.
While the platform doesn’t provide direct investment in the S&P 500, it includes the Wahed FTSE USA Shariah ETF (ticker: HLAL), which is an exchange-traded fund (ETF) that Wahed Invest launched to provide Shariah-compliant exposure to the U.S. stock market.
This ETF tracks the FTSE USA Shariah Index, which includes U.S.-based companies that meet strict Shariah guidelines.
Read more about Wahed FTSE USA Shariah ETF!
2. Sukuk (Islamic Bonds)
For investors looking for stability, Wahed Malaysia offers Sukuk as a low-risk option within its portfolios.
Sukuk provides a steady income stream similar to bonds but is structured to comply with Islamic finance principles, making it an appealing choice for conservative investors.
3. Gold as a Hedge
Gold is a unique component of Wahed Malaysia’s portfolios, and it plays an important role as a hedge against market volatility.
Known for its stability, gold is often used to offset risks, especially during periods of economic uncertainty. Gold is also widely regarded as a reliable hedge against inflation.
4. Different Level of Risks Portfolios
Wahed Malaysia offers 6 main portfolio types to accommodate various risk levels:
- Very Conservative
- Moderately Conservative
- Moderate
- Moderately Aggressive
- Aggressive
- Very Aggressive
Each portfolio includes a different mix of the above asset classes, with more aggressive portfolios leaning toward equity ETFs and conservative ones emphasizing Sukuk and gold.
5. Ethical Focus and Portfolio Rebalancing
Wahed’s automated portfolio rebalancing is a feature that stands out. The platform regularly adjusts portfolio allocations to keep them aligned with the selected risk profile and market conditions.
This ensures that investors can continue benefiting from ethical investing without needing to micromanage their portfolios and have a peace of mind knowing that their investments are working for them.
Pros and Cons of Using Wahed Malaysia for S&P 500 Investments
When it comes to investing in the S&P 500 through a Shariah-compliant platform like Wahed Malaysia, there are both advantages and some trade-offs to consider.
Pros
- Ethical, Shariah-Compliant Investment: Wahed Malaysia stands out for its commitment to Shariah compliance, making it a valuable option for investors who prioritize ethical investing.
- Indirect Access to U.S. Market via Equity ETFs: While Wahed Malaysia doesn’t provide direct S&P 500 investments, it includes the Wahed FTSE USA Shariah ETF that offers indirect exposure to U.S. markets, allowing for growth potential associated with large-cap U.S. companies in a halal way.
- User-Friendly Onboarding and Transparent Fees: Wahed Malaysia’s onboarding process is straightforward and designed with ease of use in mind.
- Portfolio Rebalancing for Consistent Performance: Wahed’s automated portfolio rebalancing helps maintain your chosen risk level by adjusting the portfolio mix as market conditions change.
- Diverse Asset Options (Sukuk, Gold, and Equities): Beyond equities, Wahed Malaysia also includes Sukuk and gold in its portfolios, which provide added stability and diversification. This mix helps cushion portfolios against market volatility, making it a solid choice for long-term investors.
Cons
- No Direct S&P 500 Investment: While Wahed Malaysia does offer exposure to the U.S. market, it doesn’t provide direct investment in the S&P 500.
- Limited Control Over Individual Investments: Wahed Malaysia’s portfolios are predetermined based on risk levels, which means you can’t choose individual stocks or funds.
- Limited Investment Options for Aggressive Growth Seekers: Wahed Malaysia’s focus on balanced and ethical investing means the platform may not offer enough high-growth options for investors with high-risk appetites. The inclusion of Sukuk and gold tends to moderate returns, which could be a downside for those looking for faster growth.
- Lengthy Deposit and Investment Processing Times: Depositing funds on Wahed Malaysia can take 1-2 days, and investing those funds can take an additional 1-2 days. This delay means that funds aren’t immediately put to work in the market, which could impact timing-sensitive investments, especially in a volatile market.
- Inflexible Portfolio Adjustments: After initially selecting asset allocations through the onboarding questionnaire, switching investments can be a challenge. I made this mistake of initially choosing to invest in gold but later decided to switch to the U.S. ETF, I needed to create an entirely new portfolio—a time-consuming process. This lack of flexibility could deter investors who want the option to adjust their portfolios easily.
Who is Wahed Malaysia Best Suited For?
Wahed Malaysia is a strong choice for Malaysian investors who are looking for a Shariah-compliant, ethical investment platform that also provides access to the US market.
1. Ethical and Shariah-Compliant Investors
Wahed Malaysia is an ideal platform for those who prioritize aligning their investments with Islamic principles.
Its portfolios exclude non-compliant sectors like alcohol, gambling, and interest-bearing assets, ensuring that investors can grow their wealth in a way that’s consistent with their values.
For Muslims and other ethical investors, Wahed Malaysia’s transparent approach to Shariah compliance offers peace of mind.
2. Beginner and Passive Investors
The user-friendly interface and straightforward onboarding process make Wahed Malaysia a good choice for beginners who are new to investing.
The platform’s automated portfolio management takes the guesswork out of investing, allowing users to choose a risk profile and let the platform handle the rest.
3. Long-Term, Conservative Investors
Wahed Malaysia’s portfolios are designed with a balanced approach in mind, including assets like Sukuk and gold to help cushion against market volatility.
For conservative investors or those focused on long-term goals, this balanced, diversified approach can provide stability, making it easier to grow their investments gradually over time.
4. Investors Seeking U.S. Market Exposure in a Halal Way
For Malaysians interested in U.S. equities but concerned about halal compliance, Wahed offers a way to gain exposure to the US market, including indirect access to the S&P 500.
Read my article on 3 Easy Ways to Invest in S&P500 as a Malaysian
5. Investors Looking for a Transparent Fee Structure
Wahed Malaysia is transparent about its fees, with no hidden charges, which is a significant advantage for investors.
The platform clearly outlines its fee structure on its website, ensuring that users can easily access and understand the costs associated with their investments.
As shown in the image above, they provide a straightforward amount of fees paid to Wahed, helping users make informed decisions without any surprises.
Conclusion
Wahed was the second robo-advisor platform I tried. While I generally prefer DIY investing through brokerages, I appreciate Wahed for its simplicity, user-friendly interface, and accessibility to the U.S. market for Muslim investors.
Wahed Malaysia offers a refreshing blend of ethical investing, Shariah-compliance, and exposure to the US market, making it an attractive choice for Malaysian investors looking to grow their wealth in line with Islamic principles.
Have you tried Wahed? Or are you thinking about starting? I’d love to hear about your experiences and any questions you may have!
Drop a comment below to share your thoughts, or feel free to reach out directly to me via email [email protected]
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