Halal Investing finds broader appeal beyond faith based roots

Sameer Azam, portfolio manager at RBC, joins BNN Bloomberg to provide a starting point in halal investing as well as the implications and institutional interest

Once seen as a niche market, Halal Investing is gaining traction with investors for reasons beyond faith.

While the growth is driven by Canada’s 1.5-million-strong Muslim population, interest is expanding outside the community as investors look for alternatives that promote sustainability and long-term value creation, said Samir Azam, Portfolio Manager at RBC in an interview with BNN Bloomberg on Wednesday.

“I believe it’s got a broader appeal just because of the values and the ethical beliefs,” said Azam.

Halal Investing means it is compliant with Islamic values and Sharia law. Halal means ‘permissible’ in Arabic.

The global Islamic finance market is widely reported to have a current value of $5.4 trillion as of last year.

Canada’s halal finance sector is small but growing. Major banks like RBC, CIBC, and Wealthsimple now offer halal-screened investment options which didn’t exist a decade ago.

What is Halal Investing?

Azam describes Halal Investing as a subset of Responsible Investing which incorporates environmental, social and governance factors (ESG) and is recognized and actively promoted by the United Nations.

The RBC Halal Investing wealth management page says both practices focus on investments that are “morally acceptable and bring positive societal impact” and “may also exclude companies from their portfolio that produce products and services that are engaged in tobacco, weapons and alcohol.”

Halal Investing goes further to exclude companies involved in activities with excessive debt, interest, pork, adult entertainment and gambling.

“It’s more focused on real economic activity,” said Azam.

Shariah-compliant total assets doubled to $60 billion in 2023 from 30 billion in 2013 according to Morningstar data. Mutual funds and ETFs also doubled in that time period but the numbers are likely understated because some assets under management were not reported.

Azam said the framework promotes long term investing, pushing capital toward more sustainable benefits in society.

“Technology, AI could be part of that, or healthcare or sustainable manufacturing,” said Azam.

He said portfolios are structured with four assets that include equities, commodities, Real Estate Investment Trusts (REITs) and certain fixed income instruments which are asset based, not interest based.

“So there is a little bit larger menu. So it’s not just equity focus,” said Azam.

He says gold remains a key holding because it is a real asset and an inflation hedge.

“You got to own the real assets. You got to find vehicles that has real backing of gold and silver,” said Azam adding that Halal Investing focuses on financially healthy companies that meet clear ethical ratios.

Debt and cash must each be below 30 per cent of market value, and income from non-permissible activities must stay under 5 per cent of total revenue.

Competitive in the markets

A recent study published by Global Business and Finance Review found that Islamic stock indices “tend to outperform conventional indices during crisis periods, particularly in developing economies and in the short term.”

An S&P Indices report also states that the S&P 500 Shariah outperformed the S&P 500 after the 2008 financial crisis when “financials significantly underperformed overall, and information technology and health care outperformed the broader market.”

The S&P Dow Jones Indices launched Shariah indices in 2006 by applying Shariah screens to the S&P 500, S&P Europe 350, and S&P Japan 500. A factsheet shows the the S&P 500 Shariah Index gained 8.9 per cent in Q3 2025, slightly outperforming S&P Global BMI which was 8.7 per cent.

The Toronto Stock Exchange doesn’t have a Shariah index yet but its first halal ETF, Wealthsimple Shariah World Equity ETF (WSHR), launched in 2021, now valued at $390 million.