Shariah compliant tracker

Magginnis

Hi
I currently have a shariah compliant tracker namely: iShares MSCI World Islamic ETF USD GBP (purchase £1000 mthly under a sipp). I use the AJ Bell platform (which I am very pleased with, easy to use app on phone aswell!).
Am considering now setting up an ISA stocks and shares ac under AJ Bell as well . Looking to invest £1000 mthly in this ISA
I am happy with the iShare MSCI islamic fund, however, feel it would be more appropriate to spread the risk a little (although I appreciate the shariah compliant market is limited).
It appears AJ Bell also do HSBC Islamic Global Equity Index IC (and BD and BC, not sure what the difference is between these 3 funds?). Would anyone be able to advise me please, am I correct in opting for these as opposed to buying exactly the same iShare MSCI Islamic funds? Are there any other "tracker type" shariah compliant funds out there?
Also is AJ Bell a good and reasonable platform for ISA stocks/shares or are there better ones out there?
Finally am I correct in paying £1000 mthly or should I just do annual one off purchase of £12,000?
Many thanks in advance

SharpShooter

AJ Bell for buying and selling stocks is ok, as long as you are ok with paying large fees of £10. I hated it and left. They charge you for even breathing.

Iweb charge £5 per trade and trading212 are free.

If you are looking for Islamic/sharia compliant funds I believe morningstar have a section for them you can search through and thrn locate them on your usaul platform.

eskbanker

Magginnis said:

Finally am I correct in paying £1000 mthly or should I just do annual one off purchase of £12,000?

Neither is correct or incorrect as such, both are valid.  However, in general, it's best to invest at the earliest opportunity, so if you already have the £12K then get it invested in a lump sum rather than drip-feeding it, on the basis that there should be more positive months than negative ones (that's why you're investing), so on average you'd miss out on some growth by deferring your investment.  On the other hand, if you don't already have the £12K then drip-feed what you do have rather than saving it up to a lump sum, for the same reason....

masonic

I would suggest sticking to one global tracker if possible. They will all have considerable overlap, but will differ in what they consider to be Sharia compliant. Some investments will be in a grey area and may be included in one index but not another, so check them against your own criteria and pick the one that covers the most of what you want without including too much of what you don't want.

Daliah

There are some sharia compliant ETFs that you might want to have a look at https://etfdb.com/esg-investing/social-issues/sharia-compliant-investing/

Magginnis

Thanks for all your replies,
I am concerned if I purchase all my investments (SIPPS and ISA's) in: 
iShares MSCI World Islamic ETF USD GBP
What if it were for example to go bust? Or is that a very unlikely scenario? Is iShares a very reputable bank/ company please?
If it is very solid and this scenario is virtually impossible then I am happy to put all  my investments with them!
Thanks

ColdIron

Magginnis said:

Is iShares a very reputable bank/ company please?

The iShares range is provided by Blackrock, the largest asset manager in the world

masonic

Magginnis said:

Thanks for all your replies,
I am concerned if I purchase all my investments (SIPPS and ISA's) in: 
iShares MSCI World Islamic ETF USD GBP
What if it were for example to go bust? Or is that a very unlikely scenario? Is iShares a very reputable bank/ company please?
If it is very solid and this scenario is virtually impossible then I am happy to put all  my investments with them!
Thanks

As ColdIron points out, this is not a company that is at any appreciable risk of going bust. On top of that you have the protection that the assets held within the ETF are ring-fenced and would not disappear if Blackrock failed.

Magginnis

Thanks, Am I also correct in saying this is a tracker fund (so the risk is quite low) and also there are a broad range/ base of different stocks to diversify risk?

Linton

Magginnis said:

Thanks, Am I also correct in saying this is a tracker fund (so the risk is quite low)

You are correct in saying that the MSCI World Islamic ETF is a tracker fund.  You are wrong to say "so the risk is quite low".  What risk are you talking about.....

1) the risk is very low that the underlying investments contravene Islamic standards
2) the risk of unusually poor prformance is low compared with choosing a fund completely at random, so is the chance of unusually good performance.
3) the risk of performing badly in an economic depression is fairly high as it invests in shares though average compared with other funds that invest in shares.

masonic

Magginnis said:

Thanks, Am I also correct in saying this is a tracker fund (so the risk is quite low)

It's not right to say that because it is a tracker fund that the risk is "quite" or even relatively low. In the context of equities, the risk would be determined by geographic and industry diversification, where a fund that was concentrated in a certain type of company would generally be regarded as higher risk than a fund greater diversification. Assuming the MSCI index (for example) is well spread between industry and region, then there would be little to gain from spreading your investment around other such funds. In an absolute sense, investing in a tracker fund is high risk because it is 100% equities, which are much higher risk than other asset classes.