Did you have any luck with finding this?
Walikum As salam Esk,
As you would note from the video above that there are various types of charges associated with investing in funds. Broadly speaking these can be categorised as:
1. Annual Investment Fund Cost: This charge go to the fund manages for managing the investment fund i.e. fee charged by HSBC/Ishares/Franklin Templeton etc. This should be same regardless of which platform you chose. It does not go to either Wahed or AJ Bell or any other platform/broker. It’s a bit difficult to dissect Wahed’s portfolio charges as they are probably based on the weighting of different funds in the portfolio. Below are the stand-alone fund charges of fund from AJ Bell’s website that are also used within Wahed’s portfolio.
Fund Charge
Global Stocks
iShares MSCI World Islamic ETF USD Dist - LSE:ISDW 0.60%
HSBC Islamic Global Equity Index IC GBP - FUND:BDCVVD1 0.49%
Emerging Market Stocks
iShares MSCI EM Islamic ETF USD Dist - LSE:ISDE 0.85%
Sukuk
Franklin Global Sukuk Fund W(Qdis) 0.90%
Point to note that this fund is not yet active on AJ bell as they would need an initial one-off £85k investment to add this to their platform but once setup anyone can put any amount of money in it.
Gold
Royal Mint Physical Gold ETC GBP - LSE:RMAP 0.22%
Other shariah funds available with AJ Bell:
Aberdeen Standard Islamic Glbl Eq A GBP - FUND:B1CHMW1
BNP Paribas Islamic Hilal Income P - FUND:BYTBKW3
HSBC Islamic Global Equity Index BD GBP - FUND:BJLVT96
iShares MSCI World Islamic ETF USD Dist GBP - LSE:ISWD
iShares MSCI USA Islamic ETF USD Dist GBP - LSE:ISUS
iShares MSCI USA Islamic ETF USD Dist - LSE:ISDU
2. Platform Fees: This is the fee which is charged by the platform/broker to buy the funds.
Wahed - 0.99%
AJ bell - 0.25%
3. Transaction Cost:
Wahed - Not 100% sure but I think its included or probably 0.05% spread you noted - its an immaterial charge in the grand scheme of things.
AJ Bell : £1.5 per trade for funds
So my personal view from a DIY perspective (not a recommendation):
- Annual Investment Fund Cost would be what it is regardless of which platform you would go
- Transaction cost is immaterial.
- Platform: This is an area where it appears money can be saved if one is willing to put in some time and DIY by simply copying Wahid’s portfolio. - a saving of 0.74% which in long run matters significantly. You may also find this thread interesting Diversifying portfolio
Note: As a general rule, please double-check the numbers and research for yourself before.
Hope this helps and may Allah guide you.
Regards
Zeeshan
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Jzkl for taking the time to post such a detailed reply - my knowledge has increased and things are much more clearer now.
Thanks, really appreciate your help!
Thank you Zeeshan , you seem very informed would you be able to share your portfolio as its difficult to find islamic ones online.
my second question is why dont you go with trading 212 instead of paying for AJ bell charges ? as i read somewhere in the form that you are using AJ bell.
Jazakallah Musa for you kind words.
- Sure. My Pension fund is 100% invested in HSBC Islamic Global Equity Index Fund with Legal and General as that is what my employer has chosen as the pension provider and their fee is very minimal due to the corporate rate agreed. As I am ~20 years away from needing to drawing any money out of it, I have chosen to be 100% in equity and also this fund is heavy towards growth stocks that should do well in long run in my view.
But listen, brother, every individual has their unique circumstances and what’s good for me may not be suitable for you… the more we educate our self about investing, the more informed decisions we can take. In terms of Islamic Options available, you can refer IFG’s Compare Halal Investments section.
- Trading 212: Very good point. Yes, Trading 212 works best if you are interested mainly in stock picking as they have limited Islamic ETFs/funds (Vs AJ Bell) i believe the “Ishares” one I mentioned in the earlier post. One thing to be aware of is that their “Investment” account has been disallowed by muftis in this forum @ Which broker do I choose now? but their “ISA Account” should work.
Goodluck
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Thank you for your comprehensive reply ,
I think im gonna open with trade 212 ISA account for the etfs im interested in which is the iShares World islamic as there is no platform fees besides the outraging expense ratio of 0.60 % the ETF is taking already and i think ill carry out my stock picking with them through my ISA account.
I haven’t found any cons for the trading 212 isa account so far, im not sure why AJ bell is more popular.
Im looking for a reason to open with AJ bell as you can see.
For the purpose, you have mentioned I would agree that you open trading 212 ISA account which is best if you are interested in stock picking or if the limited Islamic ETFs they are offering is sufficient for you.
Stock picking is not something that everyone should get engaged especially if someone is just beginning their investment journey (a general comment not towards you). I also have an account with trading 212 for only “playing” with shares with a minor amount. Stock picking is not something that I feel comfortable. I like the satellite style of investing where the bulk is invested in a fund/ETF and then a minor amount for shares trading.
With regards to AJ bell being popular - it would probably be down to the number of Islamic funds they offer. I have not seen any other platform offering that many.
Good luck
Thank you Zeeshan,
for reference to anyone who would like to know which islamic funds both platforms offer:
AJ bell:
Trading 212 :
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I have found this amazing article
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Wa Salaam Esk.
Firstly, Wahed is a discretionary Fund Manager meaning that we invest in assets that we feel will work best in line with your chosen risk profile. The service is provided using a wrapped fee charge. Meaning that all dealing and custody charges are wrapped in one fee that you pay Wahed. Importantly, this includes the purification report which all customers received earlier this year for the investments they held over the course of 2019
This service is different to what stock brokers such as HL or AJ usually offer. They charge a custody fee and transaction fees in addition to what the fund managers charge. If you wish to compare like-for-like services, Hargreaves have an equivalent service to Wahed which is called Portfolio Plus.
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Thank you Abul for your entry, its a bit aching when i calculate the ER over the next 15 to 20 years in comparison to the vanguard ones which cost less than 0.1 %. I mean the fact its passive it should be lower than this.
This is a fascinating thread. Thanks @Zeeshan, @Musa_Absi and @Abul_Fazal for your contributions.
My tuppence worth is:
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I agree with Zeeshan in that the key variable is the platform fee which is where you can save.
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However, as this thread probably indicates, Zeeshan you’re actually a very switched-on investor who understands the underlying mechanics of where your money is being deployed and how. You are also fairly interested in investing (at least to the extent that you’ve done a decent bit of research).
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My experience is that many Muslim investors are not at this level of sophistication and so the choice becomes not only about platform fees but about user experience/ease etc. Here Wahed (and other roboadvisors) have a slight edge as you just have to create an account and choose your risk preference and pay in and you’re done. With AJ Bell as a Muslim investor there isn’t a cookie cutter portfolio done for you. So you have to do all the Wahed steps plus you have to search a few Islamic funds and set up direct debits to them etc. Not rocket science and something pretty much everyone can do within an afternoon of focused reading - but surprisingly few people do.
So, as we’ve always said at IFG - AJ Bell and DIY approach is always cheaper - but it may not get you the professional portfolio construction, the diversification of different funds, and it will mean a bit more legwork your end.
I personally have done both Wahed and AJ Bell.
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Jazak Allahu Kahiran @Musa_Absi. I understand and accept what you are saying and as @ibrahimkhan mentions, you can buy some of the funds yourself and look to replicate our models should you have the time, knowledge and inclination to do so.
It may be worthwhile pointing out again that we are not a fund. Each model we offer is a collection of different funds across asset classes and the weighting of each will differ according to their risk profile. We charge for managing that collection of funds on the clients behalf. In addition, we are a start-up investment firm who do not have the assets under management and therefore cannot benefit from the economies of scale that the likes of AJ, HL or Vanguard have. However, with the help of fellow Muslims by investing with us we aim to offer a similar, if not better, service in the future. That has always been Wahed’s aim.
Having seen what was available in the market, Wahed was created with the view to help the mass market Muslim community to save into a shariah compliant investment platform where their investments are managed to ensure that it is risk appropriate to their needs but most importantly, it remains halal in their hands through the issuance of the purification reports also. We firmly believe that no other global firm is doing this right now.
Barak Allahu Feekum for your thoughts and I pray that my comments help also.
Jazakallah @ibrahimkhan. I am humbled. Thank you for your kind and generous words.
I can’t agree enough with your assessment. All of us need to learn more about investing before deploying huge sums of money. It looks to me that we have a tendency of buying a posh car without knowing how to drive it - after the obvious result some of us just move away from investment and that is not good for the Muslim community. We all need to learn and become smart investors (Iqra).
I am so impressed by the work you and your team are doing in this area. This will help the community a great deal - Thanks. I would like to make a small contribution to this journey and have started a thread on Financial Education: Investment TIPS for Absolute Beginners that I am hoping would be helpful for some.
Jazakallah.
Zeeshan
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W/S
This a great site for comparing platform fees.
Salaams Zeeshan,
Jzk for all your efforts, as well as the IFG guys. I have learnt a great deal so may Allah SWT reward you all. Ameen
I had a few of questions:
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Is there a cheaper platform for fees for Stocks & Shares ISA which invest into the HSBC Islamic fund other than AJ BELL (not T212)? If only Vanguard did Shariah compliant funds!
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Can you invest in 2 funds in one ISA Account? If so, do you get hit with two fund charges?
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What are the pros/cons of investing in the div reinvested vs div distributed funds?
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Like you, my pension with Standard Life is also invested in the HSBC Islamic Fund. Therefore, would opening a Stocks & Shares ISA with the HSBC fund not be a good diversifying strategy?
walikum assalam Imran,
Glad to hear that you are finding this community helpful.
I am not aware of any other platform offering this fund at a lower platform charge then 0.25%. This is not to be confused with the fund charge which is generally around 0.5% that i have seen at most place. Let me know if you do come across with a lower fee anywhere. (T212 does not offer funds so this is not available on it)
You can invest in how many funds and stocks in an ISA account. What you may be confusing is that you cannot open more than 2 Stock and shares ISA in one tax year but there is no limitation of a number of holdings in the ISA account.
Dividend reinvestment simply means that whatever dividend you receive, you would reinvest them rather than using it. compounding effect of dividend reinvestment is unbelievably powerful. See below screenshot showing a 147 years history for gains with (blue line) and without (red) dividend re investment.
Now to your question, there can be two versions of the same fund one which is paying a dividend and other which automatically reinvesting dividend also known as accumulation funds. AJ bells offer HSBC fund in both classes but accumulating fund is being offered in USD currency which will incur a 1% fx charge from AJ belle when you invest and divest in it. The dividend-paying fund is in GBP and pays dividend half-yearly I think (pls check). Personally, i would invest in the GBP fund to save the 1%+1% FX charge and would just manually reinvest in the same fund whenever dividend is recevied.
Difficult to comment - maybe yes considering the fund itself has approx a holding of 100 shares VS MSCI Ishares but the shares within it are all growth stocks which have been performing brilliantly for past few years and my personal view is that they would probably continue to grow for some time. (Just my view). you may find this thread useful : Selecting an ETF
PS: for your pension, you should also check that the fee you are paying with standard life is lower than what you could pay to AJ Bell within SIPP i.e. 0.79% total (HSBC fund fee 0.49% + AJ bell platform fee 0.25%). If you are paying more then this then worth considering opening a SIPP with AJ bell and transfer your pension with them.
Hope above is helpful - feel free to ask any further questions.
Jazakallah.
Zeeshan
Jazakallah for your swift response brother Zeeshan,
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Yes, from doing all my research I also found AJ BELL to be the cheapest for fees. Will let you know if I come across a cheaper one.
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So with multiple funds in one S&S ISA, wouldn’t that mean multiple fund charges to mange each fund? For example, 0.5% on one fund and 0.5% on another fund would be a total of 1% fund charge on your total investment? As I was thinking of investing into the HSBC & ISHARES in one S&S ISA but the total fund charges will be quite high.
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Yes, I read your point about the FX fee earlier and was also leaning towards the GBP fund for the very same reason. The positive also being that dividends are tax free with a S&S ISA. Therefore, the BD GBP fund would be my preference too.
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Very good point on the SIPP. I’ve checked and Standard Life are charging annual 1.305% - high because it’s a previous employer pension in which no payments are being made into it (screenshot below):
I am now on a DB Pension with my current employer. However, my current employer is switching to DC in the next couple of months so was going to wait and transfer my Standard Life Pension to my current employer pension (which will be Legal & General who also have a shariah compliant pension fund). And of course, the fees with my current employer should be less than my Standard Life Pension as it’s with a current employer who will contribute. Does that make sense?
Jzk
Imran