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Many Malaysians started investing in 2020, most of us investing through roboadvisors such as StashAway and Wahed Invest. But, what is it about Wahed Invest that we like and where does our money actually get invested? Continue reading to find out!
Wahed Invest have been gaining popularity in recent times and they have made substantial changes to their app with small feature updates. Personally, we really like their new layout. It looks like this:
Aside from their new layout, there are a couple other features that we are impressed with. Here is a list of pros and cons of Wahed Invest in addition to where your money gets invested, and we will dive further into each point.
Before we get started, if you wanna invest in Wahed Invest and get RM10 to start off your journey, use our code emibin1 when you sign up so we’ll both get it! 🙂
Pros
- Option to create more than one portfolio
- Simple way in managing the ETF’s they invest in: there is a fixed set of equities or asset classes used for all risk profiles
Cons
- Minimum monthly fee or RM2.50 if you have more than 1 portfolio
Wahed Invest Pros
#1: Option to create more than one portfolio
Wahed has finally added the option to create more than one portfolio! This feels like a long overdue feature that most roboadvisors have which Wahed lacked till now. This gives an option to those of you who may be looking to save towards something.
#2: Fixed set of equities or asset classes used for all risk profiles
The company has a very simple way in managing the ETF’s they invest in. Unlike some other roboadvisors, Wahed Invest has a fixed set of investments that they use for all risk profiles.
Whether you’re in a very aggressive or very conservative portfolio, your holdings will generally consist of Malaysian stocks, US stocks, Sukuk, and gold. Sukuk and gold are pretty straightforward, and so there’s not much research to be done as a user.
Wahed Invest Cons
#1: Minimum monthly fee or RM2.50 if you have more than 1 portfolio
There’s an important note on this. If you open more than 1 portfolio with Wahed, there is a minimum monthly fee of RM2.50, or RM30 a year. If you’ve invested only RM1,000, this is 3% annually which is a bit too high.
Due to this, you should only open more than 1 portfolio if you have over RM4,000 invested in Wahed, otherwise you’d be paying more in fees than the standard. If you don’t have that amount of money yet, just stick to the 1 portfolio, it’ll work just as well!
Where does Wahed invest your money?
We’ve briefly touched on how your holdings will generally consist of US stocks, Malaysian stocks, Sukuk and gold. Now, let’s go into detail.
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Sukuk
The Sukuk portion is invested in the RHB Islamic Bond Fund and interestingly, their performances are better than anticipated. If you don’t already know us, we’re not a safe investment kind of bunch, so forgive us for not keeping up with these returns. But 5.45% returns in 2020? Impressive!
Having seen this, I’m not sure if the Malaysian investment portfolio beat the returns Sukuk returned in 2020. Let’s move on to the Malaysian stock portion to find out.
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Malaysian stocks
Our investments in the Malaysian stocks portion is put entirely into the MSCI Malaysia Islamic Dividend ETF by MyETF. It’s one of the few ETF’s that we can invest in that covers the Malaysian market, and needless to say, this only covers Shariah compliant companies.
Taking a look at their performances, the fund has performed decently. It has a 1-year return of 11%, and a 5-year return of 46%. Like all other Malaysian stocks, we can’t really expect mind boggling returns in the last few years but this fund seems to have outperformed.
Comparing this to our FBM KLCI, which tracks the 30 largest companies in Malaysia, it only returned 1.35% in the past 1year. When put side by side, there is a massive outperformance of the Malaysian Islamic Dividend ETF, so good work choosing the right one, Wahed!
In terms of holdings, these are their top holdings as of January 2021. Obviously as per their name, they only hold strong, solid stocks that pay dividends to shareholders. There are a variety of industries here, so at least it’s not too concentrated into one which may bring along some risks.
We have now seen that the Sukuk investment seems to have done well, and the Malaysian dividend portfolio has outperformed the FBM KLCI in 2020. How has the US portion of the Wahed portfolio done?
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US stocks
Interestingly, Wahed seems to have created their own ETF to manage this portfolio, named Wahed FTSE USA Shariah ETF under the ticker HLAL. Smart name,
Looking at their top 10 holdings, there are some well-established stocks in there like Apple, Tesla, Home Depot, and Salesforce. It is slightly odd that Apple holds nearly 20% of the entire portfolio. However, it’s not like they recently rallied and caused this so it seems to be a conscious decision by the fund managers.
At a glance, we like the look of this portfolio. We may think that having to abide by Shariah compliance would restrict them and may result in a lower performance, but it doesn’t seem to be impacting them that much!
In fact, when comparing the performance vs the S&P 500 in all timeframes since inception, the Wahed ETF actually outperformed the S&P 500 & the MSCI World Islamic ETF. Amaaazing!
They even have an excel that lists down all the stocks they own in this ETF and is available for download to the public. This is probably done to assure people that the stocks they invest in are Shariah compliant.
As mentioned, the portfolio has done very well since its inception in July 2019, with a 38% return. Looking at the stocks they own, our opinion is that the fund is in a good position to continue with growth.
Further information on the Wahed portfolio can be found here.
Take home message
To conclude, we are pleased by the investments that Wahed Invest place our money in. We currently don’t have that big of an amount in our Wahed account, having only deposited a total of ~RM900 so far. Our RM57 returns may not seem like much but it’s an 18% money weighted return!
Moving forward, we’re considering putting more money into our Wahed account.
If you wanna invest in Wahed too, don’t forget to use our code emibin1 when you sign up so we both get RM10!
We hope you enjoyed this article! If you prefer to watch us discuss the contents of this article, check us out on YouTube.
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