Together with the Canadian fund management industry posting strong growth in 2024, interest is starting to perk up in Shariah funds and exchange-traded funds (ETFs) – as shown in the latest statistics issued by the Investment Funds Institute of Canada (IFIC).
Overall mutual fund assets totalled CA$2.19 trillion (US$1.57 trillion) at the end of Q3 2024 compared to CA$1.84 trillion (US$1.32 trillion) a year earlier.
IFIC Research and Statistics Senior Manager Sandeep Gosal shared with IFN Investor that Shariah compliant mutual funds’ asset total rose to CA$227 million (US$163.4 million) from CA$151 million (US$108.7 million) during this same one-year period.
ETF net assets meanwhile stood at CA$478.5 billion (US$344.4 billion), up from CA$346.2 billion (US$249.2 billion) from a year earlier. The sole Islamic instrument – Wealthsimple Shariah World Equity Index ETF – saw its asset total value rise from around CA$171 million (US$123.1 million) to CA$265 million (US$190.7 million) in the same period.
IFIC statistics shared by Sandeep further showed that both the Shariah mutual funds and ETF were invested in equity, while conventional assets management had diverse investments that included bonds and money markets.
Sandeep also pointed out that IFIC tracks only prospectus-qualified funds. “Neither the Manzil Mortgage Investment Fund and OneVest Halal Equity Fund (which are featured in the IFN Investor Funds Database) appear to be prospectus qualified funds.”
While the Manzil Mortgage Investment Fund is classified as a real estate investment trust, Sandeep noted the OneVest Halal Equity Fund appears to be sold by offering memorandum. “In Canada, funds sold by offering memorandum are available to only accredited investors.”
As such, the IFIC only tracks the Global Iman Fund, Mackenzie FuturePath Shariah Global Equity Fund and Mackenzie Shariah Global Equity Fund. All these funds are also featured in the IFN Investor Funds Database.
Interest in Shariah investment opportunities may have been piqued following the inclusion of Halal mortgages in the latest Canadian Budget announced in April 2024, but the latest IFIC statistics don’t provide definitive evidence as yet of any major shift into Islamic asset offerings.
There is a further spur for growth in Shariah compliant funds, as shown by ethical investing trends among Canadians. The IFIC noted that “in 2023, one-third of ETF investors and one-fifth of mutual fund investors chose to include responsible investments in their portfolios”.
IFIC statistics show that net assets in responsible investments in mutual funds and ETFs in Canada have grown from less than CA$7 billion (US$5.04 billion) in 2014 to over CA$56 billion (US$40.3 billion) in 2023.
“Looking ahead, 59% of ETF investors and 53% of mutual fund investors expect to include responsible investments in their portfolios over the next couple of years.”
