Investing In Islamic Funds: A Practitioner's Perspective

CHAPTER 5

Broad Choices of Islamic Investment Funds

Can They Become Mainstream?

Noripah Kamso and Fouzia Amin

O mankind! Eat of that which is lawful and wholesome in the earth.

(Al Baqara: 168)13

Permissibility is the original state.

(Islamic legal maxim)13

INTRODUCTION

When Institutional Investors magazine conducted a 2010 survey of more than 50 global institutional investors and asset managers to find out the reasons why they do not invest in Islamic portfolios, one key feedback was the limited breadth of Islamic asset classes available to meet the investors’ varied appetites. However, this is more a product of unawareness and lack of education because there are already more than 700 Islamic funds offered internationally. With estimated assets under management (AUM) of USD60–65 billion,1 it continues to grow 15 percent globally. These Islamic funds cover a broad spectrum of asset classes, which have the ability to satisfy the diverse range of investors’ appetites.

During the 2010 Amanie-Failaka Symposium in Dubai, Islamic asset managers were given an opportunity to launch their funds. It was inspirational to see the announcement and briefings of an Islamic commodity and energy equity fund by a Swiss asset manager, an Islamic gold fund by a Canadian asset manager, an Islamic China equity fund by a Malaysian asset manager, and an Islamic Australian equity fund by an Australian asset manager. Islamic funds are now available from as far north as Canada to as far south as Australia. ...