Kestrl’s Investment Marketplace: Meet Our Partners
24 Dec 2021
Last week, we proudly announced the launch of our new Halal Investment Marketplace. With that, we held a three day roadshow where we were joined by our partners as they showcased their asset classes and answered frequently asked questions regarding investing. Check out our partners and more by exploring the Halal Investment Marketplace. Make sure to download the Kestrl App at https://kestrl.io/get-the-app
Day 1: Equity
We kicked off our Roadshow with SimplyEthical, who showcased their asset class — equity — before covering your questions regarding investments and their offering (check out the full event with timestamps here: https://www.youtube.com/watch?v=y47FnukyDM8))
What is a Stock and a Share, is there a difference between them?
A stock is a share of the ownership of the business, meaning that you have an equitable stake in the business. As a shareholder, you are well aware of the work done by the business and are interested in their growth– whether it be through the increase of capital, value or profit. Profits can be earned through dividends. Essentially shares, stocks and equity are the same, they all represent a growth opportunity in the marketplace.
What is a fund?
A collective investment — where money is pooled together in a pot. This is managed by an investment manager. There are a plethora of funds that exist, for example socially responsible ones, ESG compliant ones and sharia compliant ones.
Screening criteria ensure that shares are bought with regards to sharia compliance, e.g. companies that don’t manufacture or provide illegal products. The investment manager then invests this money into shares at various different companies, forming an investment portfolio.
In Islamic Finance, we all have access to collective investments, for example, pensions. By pooling investments from multiple people together, it gives them access to new, larger and exciting opportunities. Larger pools of money are also beneficial as they diversify the investments and spread the risk.
What is the difference between Active Investment and Passive Investment?
Active investing is when investors try to make investment decisions in order to beat the market e.g. the UK’s FTSE 100, a collection of the top 100 UK companies.
However, passive investing is when investors track the market and make decisions based on the FTSE100. The FTSE100 is a share index of the top 100 companies listed on the London Stock Exchange with the highest market capitalisation. Historically, active investing has never beat passive investing. However, in the short run, with the right decisions, insight and analysis, investors generate greater immediate returns from active investing than passive investing.
What is Simply Ethical offering?
Simply Ethical converses with analysts and fund managers to assess their investment decisions, ensure they are making Sharia compliant and ethical decisions, and to ensure the greatest returns for Kestrl’s clients.
SimplyEthical is a financial advisor as a firm. They make your financial goals and aspirations possible by sitting down with you and helping you set up a financial plan. Their range of expertise includes pensions, ISAs and general advice. Simply ethical offers personal and catered advice that cannot be found elsewhere.
Day 2: Property
Yielders kicked off day two of the Roadshow by highlighting the advantages of property investment and how they can help you generate income from your investment. (check out the full event with timestamps here: https://www.youtube.com/watch?v=8qadHobQySc)
What are the advantages of Property investment?
Historically, there has always been demand for houses as it is a fundamental need. Therefore, they have always been a simplistic asset class and generally the capital appreciates over time. Moreover, it is a Sharia compliant investment that has no grey area, and the proper market is less volatile hence it is considered a relatively low risk investment.
It is also important to note that there is a severe property shortage in England. Yielders help generate income to provide for the social care and housing for the more vulnerable. The platform provides a steady flow of income for the Tier 1 providers.
What are the disadvantages of Property investment?
At Yielders, the properties listed are fully regulated by the FSA to ensure that they are sharia compliant and offer the best return for investors. This therefore restricts the pool of investment significantly.
Moreover, there is also no guarantee that there will be returns on your investment. However, considering that Yielders is completely equity based mitigating the risk as the investors are still owners of the property. There is also the possibility of macro depreciation, as seen in the 2008 Financial Crisis which could risk capital depreciation.
How does Yielders work?
Each of the assets that are purchased, ensure that they comply with all the thresholds. Only the best of the asset classes. Cash purchase assets, network of yielders. Funds are then purchased using top yielders money, income is generated and given back to the top yielders. It is then listed on the retail platform, the assets are then open to be invested in by users, and income from rent is generated and distributed to the users. Property is then sold within 3–5 years and you will gain 1 percent of the sale revenue. Managing properties etc are sorted within Yielders.
Assets that have been screened and comply with all the thresholds are cash purchased by a network of top yielders. Income is then generated and given back to the top yielders. The property is then listed on the retail platform, open to be invested in by the users. Income is generated from the rent and distributed to the users.
Yielders reduce the hassle of managing properties and being a landlord as they deal with the tenants and all the issues that come with it. The property is then sold within 3 to 5 years and investors will gain 1 percent of the sale revenue.
Day 3: Gold
The last day was kicked off by Minted, who showcased their class asset: gold. Check out the full event with timestamps here: https://www.youtube.com/watch?v=C1e7OGbJMK8&t=1782s
Why is Gold an attractive investment?
Gold has always been historically popular, especially among Muslims. Not only was it perceived as desirable, beautiful to hold and a status symbol — gold was money before money was money.
Since there are different forms of gold, they are open to various income groups. Understandably however, the income generated will be relative to the amount invested in the gold. Investing in gold is a quick and easy way to make marginal returns. This is because it is a great store of wealth and therefore beats inflation. It also tends to appreciate over time and results in a long term gain.
Is Gold Zakatable?
Yes, gold is Zakatable if it meets the Masaab like any other asset. Minted notifies investors the weight of the gold to two decimal points which will help determine Masaab and the amount of Zakat that is payable.
How does Minted work?
During the financial crisis in 2008, gold was a very competitive asset class and resulted in a keen interest in its investment. Minted reduces the barriers and makes it more accessible to all. Minted minimise the need to pay high premiums and fees, and the risk of the gold potentially being stolen or lost. Users pay low fees and have the gold stored at a vault, with the option for it to be delivered to their homes.
Minted have two main options for investment
- Subscription plan
Regular investment in gold to generate income to achieve a financial goal
- Saving plan
A Monthly savings plan that can be easily adjusted depending on your income to save a proportion of your income and generate a return.
Minted also offers one off purchases with no subscription plans so users can purchase in bars. Users are able to invest in gold securely and safely from the comfort of their home.
Please note that none of the above should be considered investment advice. With investments your capital is at risk. Find out more at https://kestrl.io/