BMA authorizes Islamic equity fund
The Bahrain Monetary Agency (BMA) has authorized an Islamic equity fund, sponsored by Kuwait-based Islamic investment firm, First Investment Company (First Investment).
The First Kuwait Fund is aimed for investment in a portfolio of Shari’a-compliant companies listed on the Kuwait Stock Exchange (KSE), as well as unlisted Kuwaiti firms.
The Bahrain-domiciled, US dollar-denominated open-ended fund, is the 3rd fund to be incorporated in Bahrain by First Investment, a group of firms with activities spanning financial services, education and real estate.
The First Kuwait Fund is the 16th fund to be authorized by the BMA during 2006.
The Kingdom’s fund industry has been seeing phenomenal growth in recent years, with total assets under management by BMA-authorized mutual funds increasing by 72% to US$10.6 billion in the past one year alone. Growth in the last four years has exceeded 300%.
The number of funds authorized by the BMA totaled 2,203 at June-end 2006, compared with 1,778 and 1,288 funds at the same time in 2005 and 2002, respectively. The assets managed by the authorized funds stood at US$10.6 billion at June-end 2006, up from US$6.15 billion and US$3.13 billion at the same time in 2005 and 2002 respectively.
Locally-incorporated mutual funds totaled 96 at June-end 2006, compared with 70 at the same time in 2005 and 30 in 2002. The assets under management of the authorized locally-incorporated funds was US$2.72 billion at June-end 2006, compared with US$1.75 billion and US$175 million at the same time in 2005 and 2002 respectively.
Of the locally-incorporated funds at June-end 2006, 37 were Islamic funds. “The size of the mutual fund industry in Bahrain has changed dramatically in recent years,” said Mr. Mohammed Ayman Al Tajer, Director, Financial Institutions Supervision, at the BMA.
“As capital markets in the region have benefited from the economic boom in the region, securities are becoming an increasingly popular option for mutual fund managers and investors, both institutional and individual.”
Mutual funds have, thus, established a noticeable presence in recent years and the local funds industry is playing a significant role in directing resources and serving as an additional driving force for sustaining active capital markets in the Middle East & North Africa (MENA) region.
Bahrain is proving an attractive destination for the registration of regionally-focused funds. The Regulations Governing Collective Investment Schemes, issued by the BMA in 1992, are clear, transparent and in line with international best practice.