One of the biggest challenges in halal investing is mitigating risk. In conventional (non Shariah-compliant investing), investors use bonds or GICs (Guaranteed Income Certificates) to lower their risk and exposure to the stock market. However, since these investments are interest-based, they can't be part of a halal portfolio.
A halal portfolio needs to be composed of equities, or shared ownership in real assets, such as companies which produce goods and services. Since businesses may make profits as well as suffer losses, this is where the risk comes in. While the fates and fortunes of individual businesses may go up and down, most businesses still need to occupy some real estate. One way to mitigate risk and diversify a halal portfolio is to invest in a Real Estate Investment Trust (REIT).