The CEO says it took three months in the US to do what would probably take 12-18 in Canada.
Islamic fintech startup from Toronto Address has launched its first halal exchange-traded fund (ETF) south of the border. The company's flagship Manzil Russell Halal USA Broad Market ETF began trading on the Nasdaq this morning under the symbol MNZL.
“When you talk about a business south of the border, it’s a completely different way of thinking than a business south of the border. [in Canada]”
Mohamad Sawwaf, Manzil
With the launch of ETF, Manzil joins the ranks of US-based Islamic finance companies such as Wahed (which also offers a digital investing platform) and ShariaPortfolio by providing halal ETFs in the United States (US). For its part, Toronto-based fintech company Wealthsimple has offered a global halal ETF to Canadian investors through Cboe Canada. from 2021.
“We are now in the big leagues,” Manzil co-founder and CEO Mohamad Sawwaf told BetaKit in an exclusive interview. “I think it’s definitely a level higher for those watching us.”
Many Muslims refrain from investing in companies or products related to alcohol, tobacco, gambling or weapons, or from using financial services that involve interest. Manzil's goal is to help Muslims accumulate wealth in a halal way or in accordance with their ethical and spiritual obligations. It serves a growing but underbanked audience that is largely shut out of the traditional financial system due to a lack of options that meet their religious needs.
Sawwaf said it took Manzil just three months to develop and make its first halal ETF available in the US. He added that in parallel conversations he was told that it would take “12 to 18 months” to achieve such a result in Canada.
“When you talk about a business south of the border, it’s a completely different way of thinking than a business south of the border. [in Canada]”” Sawwaf said. “There's a level of comfort, there's a level of gluttony in the sense that they're happy with the status quo, whereas in the U.S. there really is a capitalist mindset of 'we want to constantly grow and be better, be first to market and be the fastest to market.' That's why we can launch this in such a short period of time.”
Manziel's ETF represents the latest step toward creating what Sawwaf called “halal version of Wealthsimple” The company started its activities with halal mortgage in Canada, has since expanded to offer a wider range of financial products to Muslims on both sides of the border, aiming to become “North American Islamic neobank“
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Sawwaf expects Manzil's halal ETF to “accelerate” discussions with Canadian counterparts about launching similar products at home.
“I’m still in Canada,” the CEO said, referring to recent remarks he shared with BetaKit during a fireside chat on stage at Elevate Festival last month. In this conversation, Sawwaf expressed disappointment at the pace at which Manziel is able to do business in his home country, but reiterated his commitment to moving the needle in Canada. “Unfortunately, sometimes you have to go south to get that confirmation before people in the north see it.”
This halal achievement of the ETF was made possible by Manzil's. acquisition Aghaz Investments is a registered investment adviser with the US Securities and Exchange Commission – a year ago.
Sawwaf expects Manzil's halal ETF to “accelerate” discussions with Canadian counterparts about launching similar products at home.
Manzil's head of US investments and operations Khurram Agha, who joined Manzil from Aghaz, told BetaKit that demand for existing halal ETFs shows that “the market is definitely there” for such an offering.
According to Morningstar DataTotal assets in halal or sharia funds doubled from $30 billion in 2013 to $60 billion in 2023. While mutual funds and ETFs also doubled during this period, the numbers are likely underreported due to lack of reporting.
“Manzil wants and strives to be a one-stop shop for all the financial needs of any Muslim in the North American market, be it your individual investment account, your retirement account… savings account or charitable account,” Agha said. “The ETF is a necessary part of this strategy.”
Agha said the flagship Manzil ETF offers investors access to a diversified set of over 450 large and mid-cap companies that have been screened for halal compliance.
Sawwaf said Manzil hopes to cross-list its ETF in Canada and launch many other new halal ETFs over the next 12 to 18 months. “This won’t just be a one-time event,” he said. Agha said Manziel may launch additional ETFs focused on healthcare, consumer discretionary or real estate.
Artistic image courtesy of Elevate Festival. Photo by Ferguson Media Collective.
