Aghaz Invest: A New Player in Islamic Robo-Advisory

Editor’s Note: Aghaz has now been acquired by Manzil, with Khurram Agha, the founder and CEO of Aghaz, taking on the role of Head of Manzil Invest USA.

In the evolving landscape of investment solutions for the Muslim community, robo-advisors have emerged as a compelling option for passive investors. With the recent acquisition of Aghaz by Manzil, the stage is set for a fresh approach to halal investing. This article delves into Aghaz Invest, exploring its offerings, user experience, projected returns, and how it stacks up against competitors.

What Does Aghaz Invest In?

Aghaz offers a diversified portfolio that includes various asset classes, ensuring a well-rounded investment strategy. Here’s a breakdown of their investment components:

US Equities

Aghaz invests in approximately 20 halal large-cap stocks, selected for optimal risk and return. They utilize the SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS) to ensure compliance with Islamic principles.

Halal US REITs

The portfolio includes 3-5 sharia-compliant Real Estate Investment Trusts (REITs), providing exposure to real estate and rental income.

Sukuk

Aghaz incorporates the SP Funds Dow Jones Global Sukuk ETF (SPSK), offering a sharia-compliant alternative to conventional bonds.

Precious Metal Commodities

Investments also extend to commodities like gold and palladium through the SPDR Gold Shares ETF (GLD) and the Aberdeen Standard Physical Palladium Shares ETF (PALL).

This diversified approach not only provides exposure to stocks and real estate but also includes sukuks, which generate revenue from underlying assets, and precious metals, which are valuable in various industries.

Onboarding and User Experience

The onboarding process with Aghaz is designed to be user-friendly. Registration on their website is quick, leading users to their app where they complete a series of questions to determine their investment profile.

Once set up, users can view various investment profiles, projected return rates, and asset allocations. Aghaz allows users to set specific investment goals, even enabling the creation of custom goals, such as saving for a Tesla.

The app is well-designed, featuring tools like a halal US stock screener, a savings calculator, and a zakat calculator. Initial experiences indicate a positive user interface, with customer support reaching out promptly to assist new users.

Expected Returns

Aghaz offers five model portfolios based on risk tolerance, with projected annualized returns as follows:

Conservative: 11.57%
Moderately Conservative: 16.98%
Moderate: 23.38%
Moderately Aggressive: 29.26%
Aggressive: 32.93%

While these projections are ambitious, they are based on backtesting and the favorable market conditions of 2020. However, as with all investments, past performance does not guarantee future results.

Comparison with Other Options

DIY Investing

For those considering a DIY approach, US stockbrokers now offer competitive pricing, often with $0 trade fees. While replicating Aghaz’s portfolio independently is feasible, it requires time and effort to manage multiple investments and ensure sharia compliance. Aghaz simplifies this process by providing active management and customer support.

Competing Robo-Advisors

When comparing Aghaz to other Islamic robo-advisors like Wahed and Sarwa, several factors come into play:

Fees and Minimum Deposits

Provider
Balance
Minimum Deposit

Aghaz
< $100k
$1,000

Wahed
< $100k
$100

Sarwa
< $100k
$5

Aghaz’s fees are competitive for balances between $8k and $100k, but it is more expensive for lower balances.

Investment Options

Asset
Aghaz
Wahed
Sarwa

US Equity ETFs
Yes
Yes
Yes

Global Equity ETFs
No
Yes
Yes

Sukuks
Yes
Yes
Yes

Gold
Yes
Yes
Yes

Palladium
Yes
No
No

Halal REITs
Yes
No
No

Aghaz stands out with its inclusion of palladium and halal REITs, although it lacks exposure to global equities, which Wahed and Sarwa provide.

Pros and Cons

Pros

Investment in established US funds and individual stocks.
In-house investment strategy, not just a wrapper for other funds.
Ability to tailor investments to specific goals.
Exposure to diverse assets like property and palladium.
Excellent customer experience and a user-friendly app.
More actively managed than many competitors.
Direct communication with customer support.

Cons

Higher fees compared to DIY accounts.
More expensive than some Islamic robo-advisors for lower balances.
Limited to US investors currently.
Ambitious projected returns that may be challenging to achieve.

Verdict

For those who prefer a hands-off investment approach, Aghaz presents a solid option in the robo-advisory space. Its unique offerings, including exposure to additional assets and a commitment to active management, set it apart from competitors. If Aghaz can deliver on its projected returns, it may well establish itself as a significant player in the Islamic investment landscape.