eToro, the trading and investing platform, has partnered with Arabesque AI, an investment advisory and technology company, to launch a new Sharia-compliant portfolio for users in the Middle East. Named ShariaAI-Growth, the portfolio leverages Arabesque’s AI technology and bank of environmental, social, and governance (ESG) data to identify high-growth US stocks that comply with Sharia principles.
“Since our launch in the UAE six months ago, our goal has been to tailor our services to meet the evolving needs of our users in the region,” explained George Naddaf, GCC & MENA Regional Manager at eToro. “Our recent survey of retail investors in the UAE found that 84% consider ESG factors before investing, with 35% emphasising the importance of their investments being Sharia-compliant.1 We are thrilled to announce our collaboration with Arabesque AI to offer a portfolio that leverages advanced AI technology and ESG data.”
Sharia-compliant investment products have provided competitive returns over the long term. The S&P 500 Shariah Index returned 14.25% per year for the 10-year period to the end of March 2024, compared to 12.96% per year for the regular S&P 500 Index.2
Omar Selim, Group CEO of Arabesque said: “We are delighted to partner with eToro to deliver faith-based investment products at scale, powered by Portfolio Dragon and ESGBOOK.”
The ShariaAI-Growth portfolio comprises up to 40 US equities. The selection process is as follows:
- Step 1: From the pool of US stocks available on the eToro platform, only those with a market cap of over US$1 billion and an average daily trading volume of over US$10 million are eligible.
- Step 2: The eligible stocks then have to pass a business activities screen and financial ratio screens to guarantee their compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Sharia principles.
- Step 3: The compliant stocks are evaluated with Arabesque’s AI technology to select those with the highest expected returns, strong earnings growth over the previous 12 months and high ESG scores to be included in the final portfolio.
The portfolio is rebalanced quarterly taking into account expected returns, as well as risk and transaction costs. The Sharia screening process is based on the AAOIFI Shari’ah Standard No. (21).
Initial investment starts from US$500 and investors can access tools and charts to track the portfolio’s performance, while eToro’s social feed will keep them up-to-date on developments in the sector.
- The survey, commissioned by the trading and investing platform eToro, sampled 1,000 retail investors residing in the UAE. The survey was conducted from 4 April – 9 April 2024 and carried out by research company Appinio. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment or equivalent. They did not need to be eToro users.
- Data taken from S&P 500 Shariah Index on 26th April 2024.
About eToro:
eToro is the trading and investing platform that empowers you to invest, share and learn. We were founded in 2007 with the vision of a world where everyone can trade and invest in a simple and transparent way. Today we have over 35 million registered users from more than 100 countries. We believe there is power in shared knowledge and that we can become more successful by investing together. So we’ve created a collaborative investment community designed to provide you with the tools you need to grow your knowledge and wealth. On eToro, you can hold a range of traditional and innovative assets and choose how you invest: trade directly, invest in a portfolio, or copy other investors. You can visit our media centre here for our latest news.
About Arabesque AI:
Arabesque AI is an investment advisory and technology company that combines a proprietary AI-driven alpha assessment and market-leading ESG data, to deliver clients with portfolios that are customised and impactful, at competitive cost.
Arabesque AI delivers its offering through its technology platform, Portfolio Dragon. Constructed on the cloud, Portfolio Dragon equips portfolio managers with the tools to diagnose their existing portfolios – across financial and sustainability dimensions, and create and manage customised portfolios at scale. Using deep learning and sustainability data for more than 30,000 companies, Arabesque AI automates the complex and costly processes of integrating financial and non-financial preferences into clients’ investments.
Today, Arabesque has a global team of over 30 finance, technology, and ESG professionals, and offices in London, Frankfurt, and Singapore.
UAE:
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