Islamic assets proving to be perfect alternative investment avenue

Dubai—Asset management, one of the main pillars of the fast growing $2 trillion (Dh7.34 trillion) Islamic finance industry, is gaining interest among investors as an alternative investment avenue, according to bankers and investment managers. During the last 10 years, Islamic asset management has evolved significantly and witnessed a number of developments. Sukuk remains the most recognised Islamic instrument and forms a part of a majority of Sharia-compliant funds.
At a recent conference on the future of Sharia-compliant asset management, organised at the Emirates Institute for Banking & Financial Studies (EIBFS), senior bankers and financial experts from the industry endorsed their support for the industry. Experts acknowledge that there is a wide and increasing gap between demand and supply of Islamic assets, and specifically in Islamic funds the demand-supply gap is expected to be about $105 billion (Dh385.6 billion) by 2019. The overall trend for the industry remains positive with the Assets under Management (AUM) of total global Islamic funds, at the end of 2014, growing 5.3 per cent from the previous year.
During the same period, Islamic money market funds performed the best as customers moved to cash amid uncertainties in the global economy. “After the global financial crisis, while the investors’ interest in Islamic assets has grown, Islamic asset management product offerings are still limited, leading to the demand-supply gap,” said Dr Sabahuddin Azmi, academic coordinator for the Islamic Banking programme, at EIBFS. “Islamic wealth management avenues satisfy less than half of outstanding demand. There is need to develop more institutions capable of organising new issues,”.—Agencies

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