Gordon Robinson, then Left to Right, Nadine Mezher, Mark Chahwan, Co-founder and CEO of Sarwa and Danny Jabbour, in Sarwa office in DIFC, Dubai. Image Credit: Antonin Kélian Kallouche/Gulf News

Dubai: Sarwa, the Dubai-based digital investment start-up, is building on local values by introducing halal and socially responsible investing to its robo-advisory platform. The company has also announced it would lower its minimum investment amount to $500.

“We realised there was a gap in the market, and we wanted to provide services to the previously unmet needs of the large emerging-affluent segment,” said Danny Jabbour, Sarwa’s head of wealth advisory, referring to demand for Islamic finance investment advisory.

Muslims are forbidden from investing in interest-bearing instruments, or industries such as alcohol, tobacco, arms, and gambling.

Jabbour said that Sarwa believed a significant percentage of Muslims felt like they did not have access to financial products that provided enough liquidity and transparency, while also aligning with their values. “There is a need in the market for low cost portfolios catering to observant Muslims and who also believe in passive investing,” he continued. “These new portfolios make halal investing accessible and affordable to everyone.”

The hotly-tipped start-up, which recently raised $1.3 million in an early stage funding round, claims to combine fully digital, low-cost wealth management services with the philosophy of passive investing. It is part of a wave of robo-advisory platforms that recommend portfolios built on lower-fee charging passive funds to investors based on their risk appetite. Such platforms are already popular in Europe and North America.

Gulf News understands that Sarwa is planning to announce its Series A funding round in the coming weeks. For Sarwa, being founded in Dubai gives it an added responsibility to be in touch with the needs of the local population.

“It’s important for a brand to have strong market affinity,” Jabbour said. “Sarwa has that at its core. “That is why we wanted to offer portfolios that have all the benefits of our other portfolios while being compliant with Islamic investing practices.”

Jabbour said the move to begin offering socially responsible investing — dubbed by some as SRI — made sense given how fast-growing the segment was.

The company “recognised early on the need in the region for an efficient way to invest around values, and launched the new SRI portfolios to fill this void,” he said. “Investors in the Middle East and North Africa can now align their assets with their values.”

Sarwa’s SRI portfolios limit exposure to companies that have a negative social impact, while investing more in to companies that focus on environmentally sustainable practices and fair labour standards, among other things, Jabbour said.

The company says that this needn’t dampen investment returns, claiming that they have a 99 per cent correlation with conventional portfolios. Previously, Sarwa required a minimum investment of $2,500. It has now lowered that to $500, in an attempt to widen its addressable market.

“Sarwa’s main mission is to make investing easy and accessible to everyone — and not just the affluent segment,” Jabbour said. “Mainstream investors can now gain access to products not traditionally available to retail investors.”

The most important factor, he added, was that a lower minimum would make people more comfortable to trying something new: “With no lock-in period, they now have the flexibility to open or close an account anytime.”

Jabbour declined to state how many active clients Sarwa currently has, but pointed to the company’s growth rate of 5-10 per cent week-on-week as evidence of the service’s increasing popularity.