The global stock of Shari’a compliant assets under management (AuM) expanded by a fair 4.9 percent during the first half of 2014, and reached a new high of USD 75.1 billion due to the ongoing capital allocations to Islamic products and performance based gains, a report by the Kuwait Finance House (KFH) has said.
The number of Islamic funds rose from just over 800 in 2008 to an estimated 1,069 as by June 17, 2014, the report added on Friday. Saudi Arabia and Malaysia hold more than 60 percent of total Islamic fund assets globally. According to the report, the total Islamic finance assets around the globe reached approximately USD 1.8 billion at the end of 2013, and is widely projected to surpass USD 2 trillion as early as the third quarter of this year.
The KFH report also said that the Islamic banking and sukuk sectors continue to dominate the industry, with respective 80 percent and 15 percent shares in aggregate assets. The industry’s future is expected to be reinforced by growing economic prominence of traditional Muslim jurisdictions, increasing international stakeholder awareness of Islamic finance value propositions, and facilitative regulatory initiatives in aid of Shari’a compliant financial structures in various parts of the world. European domiciles with pronounced ambitions in Islamic fund management have attracted a significant portion of Islamic AuM – Luxembourg with 8 per cent and Ireland with 4 percent, said the report. The emerging Islamic finance markets of Indonesia, Pakistan and the UAE have been making commendable progress in Shari’a compliant asset management, alongside other areas of the Islamic finance industry.
The report revealed that equities continue to dominate the portfolios of Islamic asset managers, accounting for 44 percent of total Islamic AuM. The universe of Shari’a compliant stocks around the globe is steadily expanding.
In view of prevailing conservative attitudes among some retail Islamic investors, approximately 16 percent of Shari’a compliant AuM is invested in low-risk money market instruments. These short-term liquid instruments are especially sought after in Malaysia – it accounts for 27 percent of aggregate Islamic investments in money market securities – which has built up an active domestic Islamic money market.
Shari’a compliant investments in real estate at present make up only a small portion of total Islamic AuM and are made mostly by GCC-focused real estate funds and a few Shari’a compliant real estate investment trusts (REITs) operating out of Malaysia.
Source : KUNA Kuwait News agency
