Whether it’s mutual funds, savings accounts or stock trading, millions of Canadians depend on investments for their financial future.
But for some Muslims, faith took many monetary options off the table because of religious restrictions around concepts like paying — or being paid — interest.
It meant for years Canadians like Ammar Maqsud, who observes those religious tenets, couldn’t even put money in a standard savings account from his bank.
“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,” said Maqsud, who works as an engineer in Calgary’s energy sector. Halal is an Arabic term that translates to “permitted” or “allowed” in English.
Nearly five per cent of Canada’s population identifies as Muslim, according to Statistics Canada. That could mean up to 1.8 million people faced similar problems if their religious beliefs match practices like Maqsud’s.
While Islam does not typically ban investment, many practising community members cannot invest in companies that produce or sell religiously restricted products, which means it can be difficult to invest in accounts or financial products that may touch various sectors of the economy.
“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, and that 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, alcohol or pornography allowed
Calgary’s Hash Assad is a financial consultant with IG Wealth Management who focuses on this community. Maqsud is one of his clients.
“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 his job 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, pornography, 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 Loblaw Companies Ltd., listed on the Toronto Stock Exchange as TSE:L and 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, because its 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 be everywhere practising Muslims want to be.
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 the S&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 economist points out that when financial advisers make it easier to choose halal investments, there is a positive societal impact.
“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.