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From mutual funds to stock trading, millions of people depend on investments for their financial futures. But for some of the nearly two million Muslims in Canada, faith took those options off the table until markets began to offer religiously compliant investments.
Typical Canadian financial products aren't suitable for many practising Muslims
Anis Heydari · CBC News
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Whether it's mutual funds, savings accounts or stock trading, millions of Canadians depend oninvestments for their financial future.
But for some Muslims, faithtook many monetary options off the table because of religious restrictions around concepts like paying —or being paid— interest.
It meant for yearsCanadianslikeAmmar Maqsud, who observes those religious tenets, couldn't even putmoney in a standard savings account from hisbank.
"They didn't have any halal options available;I kept it all chequing. So basically I was losing money [due to]inflation, because it was not invested for many years," saidMaqsud, who works as an engineer in Calgary's energy sector.Halal is an Arabic term that translates to "permitted" or "allowed" in English.
Nearly fiveper cent of Canada's population identifies as Muslim,according to Statistics Canada. That could mean up to 1.8 millionpeople faced similar problems if their religious beliefs match practices likeMaqsud's.
While Islam does not typically ban investment, manypractising community members cannot invest in companies that produce or sell religiously restricted products, which meansit can be difficult to invest in accounts or financial products that may touch various sectors of the economy.
For example, any mutual fund that included bank stock would be off-limits to Muslims adhering to this religious practice. Maqsud pointed out this can make locating appropriate investments difficult.
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"I think a lot of the Muslim community is shy of investing, period," he said.
"They're like, hey I'm not going to invest at all to begin with, andthat is holding them back for sure."
However, Maqsud is one of many Muslims taking advantage of an emerging market in Canadian investments — targeting customers who want"halal" options, or those that match his religious requirements.
No insurance, alcoholor p*rnography allowed
Calgary's Hash Assad is a financial consultant withIG Wealth Managementwho focuses on this community.Maqsud is one of hisclients.
"To be brutally honest with you, a lot of Muslims do not have a handle on what they can and cannot do," Assad told CBC News.
Most products that a Canadian investor would purchase from a financial institution are incompatible with the Islamic prohibition on interest, or riba.
"That makes most, if not all, conventional investments off-limits for Muslims. Things as simple as a savings account, not allowed....Guaranteed investment certificate? Not allowed....Bonds, mutual funds,exchange traded funds," he listed.
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According to Assad, there are many other economic areas to avoid as well, and hisjob is to carefully select stocks and investments that do not touch any of them.
"The sectors that are not allowed to be invested into includes advertising, media, financial [products] including insurance companies, gambling, alcohol, p*rnography, weapons of mass destruction," he said.
Companies must also avoid being too debt heavy so they aren't seen as profiting or operating based on interest charges,said the financial consultant.
Halal meat, sure. Halal stock? Nope.
Even businesses you might not consider problematic can be off-limits to some Muslims. Take LoblawCompanies Ltd., listed on the Toronto Stock Exchange asTSE:Land running more than 2,400 stores including some of Canada's largest supermarkets.
Loblaw stores might sell halal meat every day, but the company is not a halal investment, according to Assad, becauseits financial subsidiary makes money from interest.
However, companies such Visa and MasterCard are considered halal by advisers like Assad, because while those companies process and facilitate debt and interest charges, they do not charge the interest directly.
Instead, it's banks that charge and collect the interest. Hence, banks are not halal. Visa? To paraphrase their slogan, it could beeverywhere practising Muslims want to be.
WATCH| Canadian Muslimsgainingfinancial options with halal investments: 9 months ago Duration 2:05
Creating more halal investment opportunities
Assad pointed out that many Canadian energy and mining companies are considered halal, as are some technology companies.
Many stocks considered halal are also indexed by financial agency S&P,including a list of Canadian stocks called theS&P/TSX 60 Shariah Index.Muslim investors looking to keep their finances halal are also able to access these options, just as any Canadian could purchase stocks or indexes on their own if they chose to.
Social impact, not just financial
A Toronto economistpoints out that whenfinancial advisers makeit easier to choose halal investments, there is a positivesocietalimpact.
"When a group is sort of excluded from participating in financial markets, they're held back," said Walid Hejazi, professor of economic analysis and policy at the University of Toronto's Rotman School of Management.
According to Hejazi, creating financial vehicles that are easy for Muslims to access helps create better ways to integrate various groups as they immigrate and move to Canada as well.
"It opens [financial]facilities for new arrivals in these communities that are so very important as gateways into broader Canadian society," said Hejazi.
ABOUT THE AUTHOR
Anis Heydari
Senior Reporter
Anis Heydari is a senior business reporter at CBC News. Prior to that, he was on the founding team of CBC Radio's "The Cost of Living" and has also reported for NPR's "The Indicator from Planet Money." He's lived and worked in Edmonton, Edinburgh, southwestern Ontario and Toronto, and is currently based in Calgary. Email him at [email protected].
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