Halal Investing

What is halal investing?

Halal investing is investing in companies that are in line with Islamic principles of investing. A lot of conventional investment products aren't compliant. For example, profiting off debt is prohibited, so bonds and GICs are off the table for observant muslims. Additionally, halal investing prohibits businesses that profit off certain activities, including alcohol, tobacco, gambling, pork, and weapons, among others.

What's included in the Halal Investing portfolio?

The Halal Investing portfolio includes 50 stocks selected to track the broad market as closely as possible to maximize our clients’ diversification, while complying with Islamic law. See the entire list of stocks here.

What risk profile is the Halal Investing portfolio?

The Halal Investing portfolio is an all-equity investment portfolio, so it's a higher risk portfolio. As it doesn't include fixed income to mitigate risk, investors should keep more of their assets in cash than investors who are in more conservative portfolios.

Why isn't there a Balanced or Conservative option for the Halal Investing portfolio?

NBC's other portfolios use fixed income (bonds) to lower the overall risk of a portfolio for balanced and conservative investors. Islamic investing principles exclude fixed income, so the Halal Investing portfolio is an all equity portfolio. Equity is more volatile than fixed income, so it is a higher risk Growth portfolio.

We recommend keeping more of your assets in cash if you're investing in the Halal Investing portfolio, and speak with one of our portfolio managers if you have any questions.

What are the fees for NBC's Halal Investing portfolio?

We charge the same fees as for our halal portfolio as we do for our regular and socially responsible portfolios: nothing on the first $5,000 for a year, 0.5% up to $100,000, and 0.4% over $100,000. Plus, you get an additional $10,000 managed free for every friend you refer to NBC!

Why am I being advised to hold cash?

Based upon your ability to take risk and your investment objectives we will advise on a certain risk profile that may include cash. In these cases, cash replaces fixed income we would otherwise employ for other mandates.

Does the Halal Investing portfolio use ETFs?

No, it uses individual stocks rather than ETFs. But the process we use to construct our Halal Investing portfolio is very similar to an ETF, which tracks a market index as a whole, rather than trying to pick stocks.

Does the Halal Investing portfolio use bonds?

No. Bonds pay interest, which is not allowed under Islamic law. The Halal Investing portfolio is an all equity (aka stocks) portfolio.

Is the Halal Investing portfolio considered active or passive investing?

The Halal Investing portfolio uses a passive investing strategy, like NBC's other portfolios. It represents 50 stocks that were selected to track the broad market as closely as possible.

What research do you do to ensure that the companies in the portfolio follow Shariah law?

We created the portfolio in partnership with MSCI, one of the world's largest index providers, and we used a methodology approved by MSCI’s Shariah advisors’ committee of scholars.

Will my portfolio be rebalanced in a similar way to other NBC portfolios?

Yes and no. Yes, we rebalance your portfolio on a regular basis - you don't have to do anything. But the way the rebalancing works is a little different, because of the way the portfolio is constructed. We rebalance your portfolio when the index gets rebalanced, which takes place once a month.

Can anyone invest in the Halal Investing portfolio?

Of course! Anyone who is a suitable investor can invest in this portfolio.

Can the Halal Investing portfolio be customized?

NBC has one version of Halal Investing portfolio and it can't be customized. We've built a fully diversified portfolio of stocks that complies with Shariah law constructed by the expert team at MSCI.

Can I expect the same performance as in other NBC portfolios?

The Halal Investing portfolio is 100% invested in equities. This means the risk profile and portfolio construction is similar to the standard Growth portfolio, but without the bond holdings. As it's a new portfolio we don't have performance data available yet. The performance should be similar over the long run to a Growth portfolio, but it as an all-equity portfolio, investors should expect to see more fluctuation than in other portfolios.

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