Halal Investing Is Complicated. There's an App For That

New fintech companies and social media are helping match portfolios with beliefs

- Dayana Mustak

In a crowded field of social media influencers who dispense financial advice, Sheikh Joe Bradford has found his niche. An expert in Islamic law, Bradford teaches his audience how to invest their money the halal way.

The comment sections of his accounts-where 85,000 followers across Facebook, Instagram and Twitter convene-are full of questions about and Tesla Inc. permissible but excludes financial companies such as JPMorgan Chase & Co.

Berkshire Hathaway Inc. is forbidden because of its large holdings in property and casualty insurers, which receive substantial interest income from bond investments.

But things quickly get more complicated.

Netflix Inc., with original content such as the reality show Too Hot to Handle, where participants lose money if they hook up with their fellow contestants, is a toss-up, since it may promote promiscuity. Even the status of grocery giant Walmart Inc. is questionable because it sells alcohol, pork and tobacco. Companies are also disqualified if they have debt that's more than 33% of their market value-a ratio that's constantly moving for some businesses. About half of the companies in the Russell 2000 wouldn't pass the debt-tomarket-cap test, according to Bloomberg data.

The Islamic finance industry globally is wellestablished and is estimated to be worth about $3.6 trillion. Of that, about $630 billion is sukuk, or Islamic bonds. Rather than lend money to a conventional borrower in exchange for interest, sukuk holders own a share of the asset that backs the debt and receive income from any profit it generates.