ETF Global

Wealthsimple Shariah World – WSHR

Asset Class:

Exchange-Traded Fund

Min Investment (S$)

1

People's Rating

No reviews yet

This is rating by the community.

Inception Date

12 May 2021

How Liquid

Liquid

Very liquid: Immediately able to liquidate.
Liquid: Only able to liquid at certain times.
Peer to Peer: Only able to liquid with another agreeable person.
Not Liquid: Investment cannot be withdrawn.
Campaign Based: Investor can only withdraw after campaign ends.

Expenses

0.53%

Historical Return

-11.31% (1 Year Annualised)

Returns annualised and sourced from Bloomberg
or directly from investment platform.

Wealthsimple Shariah World

Disclaimer: IFSG does not intend to offer or solicit anyone to buy these investments, wherever the recipient of this message may be. All investments involve risks and may result in loss. The above information and contents of Investments are for educational purposes only.  You should seek assistance from a licensed financial advisor on investment matters.

Brief information: Wealthsimple Shariah World Equity Index ETF is an exchange-traded fund incorporated in Canada. The ETF seeks to replicate the performance of the Dow Jones Islamic Market Developed Markets Quality and Low Volatility Index. It invests primarily in equity securities of developed world markets.

This article is currently undergoing the vetting process.

Introduction to The Wealthsimple Shariah World Equity Index ETF (WSHR)

The Wealthsimple Shariah World Equity Index ETF (WSHR) is an investment fund that aims to expose investors to global equities while adhering to Islamic principles. It is designed to track the performance of the Dow Jones Islamic Market Developed Markets ex-U.S. Index, which consists of companies listed in developed markets outside the United States.

The ETF is provided by Wealthsimple, a Canadian financial services company that offers a range of investment products and services. Wealthsimple Shariah World Equity Index ETF is specifically designed to meet the needs of Muslim investors who wish to invest according to Shariah principles.

What are you investing in?

The WSHR ETF aims to provide investors with a diversified portfolio of companies that meet the requirements of Shariah compliance. The companies included in the index are screened based on guidelines established by Islamic scholars, and only those that meet the criteria are included in the fund.

Investing in the WSHR ETF allows investors to gain exposure to a broad range of global equities while ensuring their investments align with their religious beliefs. The ETF provides a convenient and cost-effective way to access a diversified portfolio of international companies compliant with Shariah principles.

Top 10 Holdings

% of TNA

Swisscom Ag

1.00

Nestle

0.99

Johnson & Johnson

0.94

Singapore Telecommunication

0.91

Novartis Ag

0.90

Procter & Gamble

0.89

Mondelez International

0.83

Meiji Holdings

0.83

Coca-Cola

0.83

Thomson Reuters

0.82

How do you grow your money by investing in Wealthsimple Shariah World Equity Index ETF (WSHR)

By investing in WSHR, you become a shareholder in a diversified portfolio of global stocks that adhere to Islamic principles. The fund follows a passive investment strategy, seeking to replicate the performance of the underlying index. As the index constituents experience growth and generate profits, the value of the ETF’s investments may increase, potentially leading to capital appreciation.

The performance of WSHR is influenced by various factors, including the performance of the underlying companies, market conditions, and the overall performance of the global equity markets. It’s important to note that investing in any ETF, including WSHR, involves market risk and the value of your investment can fluctuate.

To grow your money through WSHR, it’s advisable to consider your investment goals, risk tolerance, and time horizon. Regular monitoring of the fund’s performance and reviewing your investment strategy in line with your financial objectives is also important.

What makes Shariah Compliant?

WSHR complies with Shariah law and excludes companies deriving more than 5% of their income from 

  • Alcohol
  • Tobacco
  • pork-related products
  • weapons
  • conventional banking or insurance companies
  • adult entertainment. 

The ETF also excludes companies with excessive leverage. The ETF and its underlying index have been certified by a team of Islamic researchers at Ratings Intelligence Partners, and dividend purification information is made available quarterly

ESG rating of Wealthsimple Shariah World Equity Index ETF (WSHR)

ESG Overall Score: 72

Environmental Score:

69

Social Score:

74

Governance Score:

72

Controversies score: 65

The Wealthsimple Shariah World Equity Index ETF (WSHR) has an overall ESG score of 72, indicating a relatively positive environmental, social, and governance performance. Its environmental score is 69, suggesting decent environmental practices among the companies included in the fund. The social score of 74 indicates positive social practices, such as labour practices and community engagement. The governance score 72 reflects sound governance practices, including leadership and transparency. However, the controversies score of 65 suggests some controversies may have been associated with the companies within the fund.

Analysis of Wealthsimple Shariah World Equity Index ETF (WSHR)

The following analysis provides an in-depth examination of WSHR’s performance over six month and one-year periods, covering key metrics such as Sharpe, Sortino, Treynor, Tracking, Information, Risk- Return Ratio, Alpha, Beta, Bear Beta, Bull Beta, R-Square, Adjusted R2, Value at Risk (VaR), VaR Normal ETL, VaR Quantile.

Analysis

Over a six-month

Over a 1 Year Period

Sharpe Ratio

0.03

0.15

Sortino Ratio 

0.03

0.15

Treynor Ratio

0.02

0.65

Tracking Error

0.35

1.73

Information Ratio 

-0.11

-0.24

Risk Return Ratio

0.07

0.25

Alpha

-0.02

-0.31

Beta

0.62

0.89

Bear Beta

0.52

0.13

Bull Beta

0.61

0.85

R2

0.69

0.8

Adjusted R2

0.69

0.76

Value at Risk Normal

-0.74

-5.38

Value at Risk Normal ETL

-0.94

-6.99

Value at Risk Quantile

-0.96

-3.88

  • Sharpe Ratio Conclusion of WSHR: 

This ratio measures how much reward you’re getting for each unit of risk. The higher the number, the better the risk-reward trade-off. Lower values indicate that the investment may not be worth the risks involved.

For WSHR, the low Sharpe ratio (0.03% and 0.15% ) indicates that the fund has a lower risk-adjusted performance, thus lower returns per unit of risk.

  • Sortino Conclusion of WSHR:

This is another way of looking at “risk vs. reward,” but it only looks at the downside, or adverse risk, relative to the risk-free rate of return. In this case, the low Sortino Ratio of WSHR (0.03% / 0.15%) means that it could be doing better in terms of generating returns when only considering the downside risk.

  • Treynor Conclusion of WSHR:

Think of this as another “bang for your buck” measure but considering how the market is doing. Higher numbers are better, showing you’re getting a good return for the market risk you’re taking.

The Treynor ratio is calculated by dividing the average excess return of an investment by its beta, which represents the systematic risk. The Treynor ratio values of WSHR are 0.02% for six months and 0.65% for one year. This indicates that the WSHR fund has generated favourable risk-adjusted returns considering its systematic risk.

  • Tracking Error Conclusion of WSHR:

This tells us how well SPUS is mimicking its benchmark. A lower number is good here, as it means WSHR is doing a good job of tracking its benchmark.

In this case, the tracking error for the WSHR ETF is 0.35% for the six months and 1.73% for the one year. These values indicate that the ETF has experienced relatively small deviations from its benchmark’s returns during these periods.

  • Information ratio Conclusion of WSHR:

The Information Ratio for the Wealthsimple Shariah World Equity Index ETF (WSHR) indicates its risk-adjusted performance compared to the benchmark over the specified periods. In this case, the Information Ratio is negative, with -0.11% for the six months and -0.24% for the one year.

A negative Information Ratio suggests that the ETF has underperformed the benchmark after adjusting for risk. It indicates that the returns generated by the ETF have been lower than what would be expected given the level of risk taken.

  • Risk Reward Ratio Conclusion of WSHR:

This is like the “value for money” metric of investing. A positive number means you get more rewards (returns) than risks, which is generally a good sign.

The Risk-Reward Ratios for WSHR are 0.07% (6 months) and 0.25% (1 year). This suggests a favourable trade-off between risk and reward for the 6-month and 1-year periods.

  • Alpha conclusion of WSHR:

Alpha is like your “extra credit” in school. If the benchmark index (against which AMAL is compared) increases by 5%, and WSHR generates a return of 6%, the additional 1% is the Alpha. An Alpha of -0.02% over six months and -0.31% over one year for WSHR means that the investment has yet to outperform its benchmark during those periods.

The negative Alpha suggests that AMAL has yet to achieve returns above what would be expected based on its benchmark index. It indicates that the investment performance has aligned with or slightly below the benchmark’s performance.

  • Beta Conclusion of WSHR:

Beta tells us how closely WSHR follows its benchmark index. If the index goes up or down, we can expect WSHR to behave similarly. A Beta close to 1 means it’s behaving almost exactly like its benchmark.

In this case, the beta of the WSHR ETF is 0.62% for the six months and 0.89% for the one year. These values suggest that the ETF has been less volatile than the broader market during these periods.

  • Bear Beta Conclusion of WSHR:

Bear beta is a measure of an investment’s sensitivity to downward movements in the market. A bear beta below 1 indicates that the investment tends to be less volatile than the overall market during bearish (downward) market conditions.

In the case of the Wealthsimple Shariah World Equity Index ETF (WSHR), the bear beta is 0.52% for the six-month period and 0.13% for the one-year period. These values suggest that the ETF has exhibited lower volatility compared to the broader market during bearish market conditions.

  • Bull Beta Conclusion of WSHR:

Bull beta is a measure of an investment’s sensitivity to upward movements in the market. A bull beta above 1 indicates that the investment tends to be more volatile than the overall market during bullish (upward) market conditions.

For the Wealthsimple Shariah World Equity Index ETF (WSHR), the bull beta is 0.61% for the six-month period and 0.85% for the one-year period. These values suggest that the ETF has exhibited lower volatility compared to the broader market during bullish market conditions.

  • R-Square Conclusion of WSHR:

An R-Squared close to 1 means that most of WSHR’s performance can be explained by its benchmark’s performance. This is useful to know if you are considering whether to invest in WSHR or just stick with a fund that tracks its benchmark.

In the case of the Wealthsimple Shariah World Equity Index ETF (WSHR), the R2 is 0.69% for the six-month period and 0.8% for the one-year period. These values suggest that approximately 69% and 80% of the ETF’s movements can be attributed to movements in its benchmark during the respective time periods.

  • Adjusted R-Square Conclusion of WSHR:

Adjusted R-squared is a modified version of R-squared that takes into account the number of variables in a statistical model. It adjusts for the degrees of freedom to provide a more accurate measure of the explanatory power of the model.

For the Wealthsimple Shariah World Equity Index ETF (WSHR), the Adjusted R2 is 0.69% for the six-month period and 0.76% for the one-year period. These values indicate that approximately 69% and 76% of the ETF’s movements can be explained by movements in its benchmark after accounting for the number of variables in the model.

  • Value at Risk Conclusion for WSHR:

Value at Risk (VaR) is a statistical measure used to estimate the maximum potential loss an investment may experience over a specified time horizon, with a certain level of confidence. It provides an estimate of the downside risk.

To put it simply, a VaR of -0.74% for the six-month period and -5.38% for the one-year period suggests that there is a 95% or 99% confidence level that the maximum potential loss of the WSHR ETF would not exceed these percentages over the specified time periods

  • Value at Risk Normal ETL Conclusion for WSHR:

The Value at Risk (VaR) Normal ETL (Expected Tail Loss) is a measure that estimates the potential loss beyond the VaR level. It provides an indication of the average or expected loss in the worst tail scenarios.

The VaR Normal ETL of -0.94% for the six-month period and -6.99% for the one-year period suggests that, on average or in the worst tail scenarios, the potential losses for the WSHR ETF could extend beyond these percentages over the specified time periods.

  • Value at Risk Quantile Conclusion for WSHR:

The Value at Risk (VaR) Quantile is another measure used to estimate the potential loss an investment may experience over a specified time horizon, at a certain confidence level. It provides an estimate of the maximum potential loss within a specific probability.

To put it simply, a VaR Quantile of -0.96% for the six-month period and -3.88% for the one-year period suggests that, with a certain level of confidence, the maximum potential loss for the WSHR ETF would not exceed these percentages over the specified time periods.

Is WSHR regulated?

Yes, WSHR is regulated by being listed on the Aequltas NEO-L (Canada). 

Conclusion

In conclusion, the Wealthsimple Shariah World Equity Index ETF (WSHR) allows Muslim investors to align their investments with their religious beliefs while gaining exposure to global equities. By adhering to Shariah principles and excluding companies involved in prohibited activities, WSHR provides a diversified portfolio that meets the needs of conscientious investors.

While investing in WSHR can lead to capital appreciation and long-term growth, it’s essential to carefully consider your investment goals, risk tolerance, and time horizon. Regularly monitoring the fund’s performance and aligning your investment strategy with your financial objectives is crucial.

Furthermore, the ESG rating of WSHR indicates a relatively positive environmental, social, and governance performance of the included companies. This demonstrates a commitment to sustainable practices, responsible governance, and positive social impact.

However, it’s worth noting that the fund’s performance analysis reveals mixed results regarding risk-adjusted returns and tracking its benchmark. The low Sharpe and Sortino ratios suggest that the fund’s risk-adjusted performance may be lower compared to the returns generated. The negative Information Ratio and Alpha indicate that the fund has underperformed its benchmark during certain periods.

Happy Investing!

Latest Reviews

There are no reviews yet. Be the first one to write one.

Post Review