Islamic investments and ESG criteria are becoming increasingly popular among investors, with the worldwide Islamic investment sector expected to reach nearly $3 trillion by 2025 and the ESG market soaring to $53 trillion globally within the same timeframe. In the UAE, 84% of individual investors prioritize ESG criteria and Sharia principles when making investment choices. This trend is expected to gain traction, especially among millennial investors.
A recent survey by eToro found that 84% of retail investors in the UAE consider ESG factors before investing, with 35% placing importance on Sharia-compliant investments. To cater to this demand, eToro has partnered with Arabesque AI to launch a new Sharia-compliant portfolio called ShariaAI-Growth. This portfolio uses AI technology and ESG data to identify high-growth US stocks that comply with Sharia principles.
Sharia-compliant investment products have shown competitive returns over the long term. The S&P 500 Shariah Index returned 14.25% per year for the 10-year period ending in March 2024, compared to 12.96% per year for the regular S&P 500 Index. George Naddaf, GCC & MENA Regional Manager at eToro, stated that the company aims to tailor its services to meet the evolving needs of users in the region, with a focus on ESG factors and Sharia-compliant investments. The collaboration with Arabesque AI offers users access to advanced AI technology and ESG data in their portfolios.
Omar Selim, Group CEO of Arabesque, expressed excitement about the partnership with eToro to deliver faith-based investment products at scale. The use of Portfolio Dragon and ESGBOOK technologies will enhance the offerings of Sharia-compliant investment products in the market. Overall, the rise in popularity of ESG criteria and Sharia-compliant investments indicates a growing cultural shift among investors towards sustainable and ethical financial practices.
In conclusion, the convergence of Islamic investments and ESG criteria presents a significant opportunity for investors seeking socially responsible and Sharia-compliant investment options. As the global market for these products continues to expand, partnerships like the one between eToro and Arabesque AI are poised to meet the increasing demand for innovative and faith-based investment solutions. With the potential for competitive returns and alignment with ethical principles, the future of Islamic and ESG investments looks promising for investors in the UAE and beyond.
