IslamicFinance.de

Malaysia's $160 billion state pension fund will offer an Islamic investment option to its members by 2017 which would create the world's largest sharia-compliant fund of its kind, Prime Minister Najib Razak said. The move could funnel billions of dollars into sharia-compliant asset managers in Malaysia in a boon for the country's Islamic finance sector. Najib did not specify how big he thought the sharia-compliant standalone fund could be. The Employees Provident Fund (EPF) already invests about a third of its portfolio in stocks and bonds that comply with Islamic principles. Najib said the Securities Commission is also developing a blueprint for the country's Islamic fund and wealth management industry to help chart its strategic direction.

Triggered by rapidly growing demand for Islamic financial instruments, Shariah-compliant exchange-traded funds (Islamic ETFs, or iETFs) are beginning to add potential to the portfolios of Muslim and ethical investors. Malaysia last week came up with the first regional Islamic ETF that will include Shariah-compliant stocks from Malaysia, Singapore, Indonesia, Thailand and the Philippines. It is being launched by investment firm i-VCAP Management. The region is joining the growing number of Islamic ETFs provided by large investment companies. The latest addition to the Islamic ETF family was an iETF launched by Seattle-based investment firm Falah Capital in October last year.

The world’s first Islamic Asean Exchange Traded Fund (ETF) is enroute for listing on Bursa Malaysia on May 7. Investment management provider, i-VCAP Management Sdn Bhd (i-VCAP), today launched the prospectus for the Shariah-compliant ETF, which will be known as MyETF MSCI SEA Islamic Dividend (MyETF-MSEAD). Chief executive officer Mahdzir Othman explained that MyETF-MSEAD was an open-ended fund with an approved fund size of 500 million units. Investors can subscribe to the fund until April 22, at RM1 per unit with a minimum subscription size of 100 units.

Saturna Capital Corporation (Saturna) has announced the launch of the Saturna Sustainable Equity Fund (SEEFX) and the Saturna Sustainable Bond Fund (SEBFX), two mutual funds that will invest globally in securities of issuers rated by Saturna as low risk in the areas of the environment, social responsibility, and governance (ESG). Saturna expects the funds will appeal to the growing number of investors who seek to incorporate sustainability and social responsibility into their investments, particularly retirement portfolios. The Saturna Sustainable Equity and Bond Funds will be available on major platforms such as National Financial Services (Fidelity), Charles Schwab, Pershing LLC, and TD Ameritrade.

Saudi Arabia-based investment bank Sidra Capital is changing its Islamic trade finance fund, initially established as closed-ended, to an open-ended format as it sees growing appetite from regional investors in the Gulf, its chief executive Hani Baothman said. The first tranche of the GCC (Gulf Cooperation Council) investors came with $50 million, and the firm expects more and more interest to come through. The fund, launched in 2012 with an initial $15 million in assets, has received approval from the Luxembourg regulator to become open-ended and it expects the Saudi regulator's approval as early as April, Baothman said.

London Central Portfolio (LCP) announces today that they will be closing their latest GBP 100 million quoted property fund on April 17th. London Central Apartments II (LCA II) is the only regulated vehicle exclusively targeting Prime Central London’s (PCL’s) Private Rented Sector. It will acquire one and two bedroom units as these are the most highly demanded and offer the highest returns. The properties will be renovated and interior designed to maximise capital uplift and rental returns. It is a five year fund, projecting an IRR of 12 per cent p.a. and shares are to be quoted on the Channel Islands Securities Exchange Authority.

The decision of State Bank of India (SBI) to put off the launch of a Shariah-compliant equity mutual fund has once again sparked debates on whether India should open doors to the concept of Islamic finance and facilitate a market for Shariah compliant financial products. The fund was designed to invest in Shariah compliant companies. Dinesh Kumar Khara, managing director and CEO of SBI Mutual Fund, said that SBI’s decision to defer the fund launch, originally planned in December, was a commercial call. On the other hand, Congress' member K Rahman Khan said in Parliament that the decision was due to political intervention.

IdealRatings has launched of a Shari’ah compliant Asia-Pacific REITs Index, called the IdealRatings Asia-Pacific REITs Index, for the use of Fund Managers who are benchmarking REITs funds. For a start, the REITs Index will cover Asia-Pacific REITs and it will subsequently widen the coverage to include the entire global REITs universe. The market cap-weighted, free-float Index has a methodology to review the universe eligibility annually. The Shari’ah screening of the eligible universe takes place quarterly and the index is also re-balanced on quarterly basis. The IdealRatings Asia-Pacific REITs Index is calculated in US Dollars with REITs listed in Australia, Japan, Singapore and other countries.

RHB Islamic Bank Bhd has teamed up with Malaysian Technology Development Corp (MTDC) to provide financing for Bumiputera technology-based small and medium enterprises (SMEs) under the Bumiputera Expansion Fund (BEF) scheme. MTDC currently manages RM150 million fund for the BEF scheme via Bumiputera Agenda Steering Unit (Teraju). Under the pact, RHB Islamic will be the custodian of the fund, which will be placed in the bank’s commodity murabahah deposit-i account. The fund is expected to raise financing of at least RM300 million for eligible Bumiputera companies involved in biotechnology, green technology, nanotecnology and food technology.

Global assets under management by Islamic funds grew slightly last year and are likely set for rapid growth in coming years as the relatively young Muslim population of the world ages, hedge fund analysis firm Eurekahedge says. Assets under management peaked at about $91 bn in the second half of 2012, but are still up sharply from less than $50 bn at the beginning of 2007, Eurekahedge data shows. The firm says the Islamic finance industry globally now measures about $2 tn, including Islamic banking, sukuk (financial certificates), takaful (insurance) and Islamic funds. Islamic banking accounts for about 80 percent of the sector, while sukuk issuances account for about 15 percent.

The Qatari bourse is all set to list one of the four planned investment funds soon. CEO of Qatar Exchange (QE) Rashid Al Mansoori said they were just waiting for the necessary approval to list the fund, while the approval process for listing the second fund is also ongoing. The remaining two proposed funds are under study, he added. One of the four funds is Al Rayan Islamic, while another one will be bonds-based. Details of the four funds are yet to emerge. Al Mansoori said several new companies would be listed on the QE this year. A number of companies have applied for listing and their requests are being looked into by the regulator.

Islamic lender Masraf Al Rayan announced it will be launching two debut funds. Of these, the Shariah-compliant Qatari equity ETF, to be listed on the Qatari bourse , is targeting foreign investors. A sukuk fund will be focused on sukuk in the GCC. Both funds will be managed by Masraf Al Rayan 's wholly-owned subsidiary, Al Rayan Investment. Al Rayan Investment manages the Sharia-compliant Al Rayan GCC Fund which invests in select companies across the GCC based on a 24-month investment horizon. The fund has two classes, 'Q' and 'F'. The Q-Fund is denominated in Qatari Riyal and is open to Qatari individual and institutional investors, while the F-Fund is denominated in US Dollars and is open to all investors, resident in any part of the world.

Tawreeq Holdings, an investment group based in Dubai and Luxembourg, has launched an Islamic trade receivables financing platform catering to the Gulf region's small businesses, with plans to tap the capital markets to fund the venture. The firm's CEO Haitham Al Refaie said the concept aims to give smaller firms a funding alternative to bank loans. Besides start-up capital from regional investors, the firm plans to raise additional funds, he added without giving monetary figures. Tawreeq's platform provides sharia-compliant factoring by connecting corporates, suppliers and investors to securitise trade receivables.

An Airbus-backed, sharia-compliant aircraft leasing fund has signed its maiden deal to buy five A330-200 planes with an option for four more. Based on list prices, the deal for the nine planes is worth approximately $2 billion, according to Dubai-based International Airfinance Corporation (IAFC), which manages the fund. The fund, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June with seed capital from Airbus and the Jeddah-based Islamic Development Bank. The fund has a target size of $5 billion and uses a 4-to-1 mix of sharia-compliant debt and equity.

Owned by the Ben Yedder family, the Amen Bank is due to start raising subscriptions on Dec. 11 for two new Sharia-compliant property funds, UFGS Islamic Fund and CEA Islamic Fund. Amen Bank is starting out modestly for what is a first-ever move on its part. Each fund will have an initial value of 100,000 dinars.

Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases. Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April. One-year interest-rate swaps climbed to a six-year high of 3.87 percent this week. Experts recommend buying Islamic bonds in the middle of the so-called yield curve, which are less exposed to losses from inflation and interest-rate moves. The government will implement a 6 percent goods and services tax as part of efforts to cut the fiscal deficit that included scrapping fuel subsidies.

Investors’ antennas had gone up in the investment markets when SBI Mutual Fund announced first official launch of a stock fund structured in line with Islamic rules (Shariah Equity Fund) in the first week of December. But this mutual fund arm of India’s largest bank, State Bank of India, took no time to defer the launch of SBI Shariah-compliant fund on the pretext of its ‘restructuring in a better and more attractive format’ is not digestible. This is a statement which makes even an ordinary mind to believe that the reason for deferring the offering could be political. Meanwhile, the two actively-managed Shariah mutual funds in the market have outperformed the Sensex recently.

The State Bank of India (SBI) will launch a Shariah-compliant mutual fund next month, the first time a state-owned bank will roll out an Islamic financial instrument for the country’s estimated 170-million Muslim population. An SBI official said the country’s biggest lender had received all clearances to launch its Shariah Equity Fund, including from the Reserve Bank of India and the government. The All India Muslim Personal Law Board (AIMPLB), the country’s apex body on Shariah law, lent its support to the move. The Bombay Stock Exchange launched India’s first Shariah index — S&P BSE 500 Shariah — in May 2013. Over the past year, it has given a return of a robust 46%.

An unnamed US investment manager has committed $100m (€80.4m) to a Sharia-compliant mezzanine real estate fund managed by Gatehouse Bank. The closed-end fund, which will invest in western European financings, is the first mezzanine product to comply with Sharia principles. Gatehouse will source, arrange and structure loans up to 85% loan-to-value over the next 18 months. The main principle of Sharia investment involves avoiding assets where more than 10% of the property involves the sale of alcohol, pork or tobacco. With three to five-year terms, the loans are expected to generate net IRRs of between 6% and 10%.

CastleHill Capital, a fund with bases in the UK and Middle East, aims to launch its first shariah-compliant UK student accommodation fund in early 2015. The fund is part of the CastleHill Group, which runs student recruitment services in partnership agreements with over 50 universities. CastleHill Capital said it would leverage these strong relationships to offer high quality student accommodation in the UK. Clyde & Co, an international law firm, has been appointed on the role of advisory on the creation of the fund.