The worldwide Islamic investment sector is expected to reach nearly $3 trillion by 2025, as per a report by PwC.
The ESG market is expected to soar to $53 trillion globally within the same timeframe. In the UAE, a significant majority – 84% – of individual investors prioritise environmental, social, and governance (ESG) criteria when making investment choices as well as taking into consideration Sharia principles. This trend is expected to gain traction in the future, propelled by the preferences of millennial investors.
In the UAE, a recent survey of retail investors by eToro, the trading and investing platform, found that 84% consider ESG factors before investing, with 35% emphasising the importance of their investments being Sharia-compliant.
eToro recently partnered with Arabesque AI, an investment advisory and technology company, to launch a new Sharia-compliant portfolio for users in the Middle East. Named ShariaAI-Growth, the portfolio leverages Arabesque’s AI technology and bank of environmental, social, and governance (ESG) data to identify high-growth US stocks that comply with Sharia principles.
Sharia-compliant investment products have provided competitive returns over the long term. The S&P 500 Shariah Index returned 14.25% per year for the 10-year period to the end of March 2024, compared to 12.96% per year for the regular S&P 500 Index.2
“Since our launch in the UAE six months ago, our goal has been to tailor our services to meet the evolving needs of our users in the region,” explained George Naddaf, GCC & MENA Regional Manager at eToro. “Our recent survey of retail investors in the UAE found that 84% consider ESG factors before investing, with 35% emphasising the importance of their investments being Sharia-compliant.1 We are thrilled to announce our collaboration with Arabesque AI to offer a portfolio that leverages advanced AI technology and ESG data.”
Omar Selim, Group CEO of Arabesque said: “We are delighted to partner with eToro to deliver faith-based investment products at scale, powered by Portfolio Dragon and ESGBOOK.”