Islamic fund managers rise to the challenge

Published March 21st, 2010 - 08:49 GMT

An international gathering of Shariah-compliant fund managers takes place in Dubai next month to reward the best performers of 2009 – one of the most challenging years yet for the $35 billion Islamic funds industry.

Fund managers from Saudi Arabia are expected to come out tops in the fifth annual Failaka Islamic Fund Awards which recognises the best performances among the 555 worldwide Shariah-compliant funds, according to organisers. The awards conclude the one-day Amanie-Failaka Symposium on 12 April 2010 at the Emirates Towers Hotel focusing on the issues confronting the Islamic funds industry.

“There is no doubt that, like the conventional finance sector, the Shariah-compliant investment industry has struggled in recent years which have been the most challenging anyone can remember,” said Mark Smyth, Managing Director of Failaka Advisors, organisers of the awards.

“Nevertheless, there have been some outstanding performances in difficult times and from the nominations it is clear that once again fund managers from Saudi Arabia have demonstrated a strong leadership role for the industry.”

The Failaka Awards have consistently set benchmarks for the performance of Shariah-compliant funds industry and highlight the achievements and innovations of fund families, fund managers and individual funds.

Categories include best equity funds globally, the GCC, Saudi Arabia, Europe, US, Asian, Malaysian, and Middle East and North Africa. In addition, there are awards for the best Malaysian Islamic bond funds, the best international Sukuk fund and the best emerging market funds.

“We have added this year the category for global Sukuk funds as they are well positioned to open up the fixed income side of the equation in Islamic asset management – a potentially very large sector,” said Smyth.

The Amanie-Failaka Symposium will debate the current investment climate for Shariah-compliant investment vehicles with a keynote address from Dato’ Muhammad Ibrahim, Assistant Governor, Bank Negara Malaysia (the Central Bank of Malaysia).
Noripah Kamso, Chief Executive of CIMB-Principal Islamic Asset Management, who will be participating in a panel discussion at the symposium, said: “Shariah investing has been proven to grant comparable long term returns despite market volatility and to focus on increasing the value of Shariah innovation.” She added that increased transparency in Shariah investing will yield predictability and broaden widespread acceptability to grow the industry.

Underscoring that potential Lipper, a global leader in supplying mutual fund information, ratings and commentary reckons Saudi Arabia has147 Islamic funds managing more than $18 billion. Malaysia, with 194 funds, manages more than $8.6 billion. The United States is the domicile of four funds managing more than $2.5 billion. A total of 36 funds in Kuwait manage $2.1 billion. South Africa with eight funds domiciled manages $644 million. Twenty funds in Bahrain manage $394 million; three in the UAE manage $78 million; and Qatar manages $16 million with one fund.

Renowned Shariah scholar Dr Mohammed Daud Bakar, Managing Director of Amanie Islamic Finance Consultancy and Education in Dubai, said the symposium would discuss the best methods of distributing funds, drawing on best practice from the two largest markets for Shariah-compliant funds – Saudi Arabia and Malaysia. There will also be key session dedicated to the re-emerging Sukuk market which peaked two or three years ago.

“Last year was a rollercoaster year for Middle East markets in particular and that volatility, combined with investor anxiety, has impacted the Islamic funds market just as much as the conventional sector,” Dr Bakar added. “It emphasises that risk management is as important to Islamic fund managers as it is to conventional finance promoters.”

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