With a minimum investment of $200 per month, the new robo-advisor will selected funds from the Islamic Master Select Portfolio, a strategy with five risk-weighted baskets.
Algebra, Asia's first Shariah-compliant robo-advisor, will be launched this December. The robo-advisor will be operated by Kuala Lumpur based Farringdon Group, a private wealth and investment manager, according to a statement from the firm.
Algebra the firm says will bring together the sound investment principles of Shariah-compliant funds with the next generation of investment tools.
Research by the Malaysia Islamic Financial Centre shows the global Islamic fund industry AUM is expected to reach $77billion by 2019.
Out-Performing Counterparts
Shariah-compliant refers to funds that follow basic Islamic principles. For example, no stocks may derive income from gambling, alcohol, tobacco, pork products, adult entertainment or military equipment.
It also restricts the use of some mainstream financial instruments such as debt-financing, charging interest or the use of derivatives. Although this shrinks the pool of investible stocks, current trends shows industry expansion with the recently announced Bursa Malaysia-Indonesia Stock Exchange Shariah stock trading link.
According to Bloomberg, the MSCI World Islamic Index has grown by 3.8 percent in 2016 and is set to outperform its counterpart for the first time in five years.
