Good news: there is money as well as mayhem in Islam. The August issue of the Cerulli Edge–Global Edition, the monthly research note from Cerulli Associates, identifies opportunities in the Islamic funds market, currently estimated to be worth US$5 billion but growing at 12% to 15% per annum, above overall global growth rates for collective schemes.
Cerulli Associates has found that Western firms dominate Islamic fund management, running nearly 70% of current assets under management. Boston-based Wellington Management, which manages funds for three Gulf banking partners, and HSBC’s Amanah unit are key players.
The bulk of assets in Islamic funds comes through private clients as well as institutional investors.
Barclays Private Banking, UBS, Pictet & Cie. And Worms & Cie. all offer self-branded Islamic funds. Most have evolved as a direct result of client demand.
Outside the private banking channel, there are local retail Islamic
fund markets in the Gulf states and in Malaysia, which is developing as an important center of Islamic fund management and finance.
Like socially responsible investing (SRI), Islamic funds are constructed using screens that weed out companies whose activities are considered immoral by Islam and forbidden to Muslims. Islamic funds must be certified by a board of Islamic scholars.
Although recent events and market conditions have dampened fund managers’ enthusiasm for launching Islamic funds, low barriers to entry and a large potential
interesting growth opportunity for asset managers. Some 20% of the world’s population is Muslim.