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Daiwa Asset Management launches Singapore’s first Shariah-compliant ETF

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Daiwa Asset Management (Singapore) has launched the country’s first Shariah-compliant exchange-traded fund on the Singapore Exchange.

Daiwa Asset Management (Singapore) has launched the country’s first Shariah-compliant exchange-traded fund on the Singapore Exchange. The Daiwa FTSE Shariah Japan 100 offers Islamic investors access to the top 100 Shariah-compliant companies in Japan ranked by market capitalisation.

The ETF seeks to track the performance of the FTSE Shariah Japan 100 Index, which is designed to represent the return of the largest and most liquid listed companies in Japan that comply with Islamic principles.

‘The Daiwa FTSE Shariah Japan 100 is the first Shariah-compliant ETF in Singapore and also our first ETF in Singapore,’ says Michihito Higuchi, president and chief executive of Daiwa Asset Management.

‘This ETF serves as an excellent proxy for the growth prospects of some of the best listed companies in Japan. Islamic investors can be assured that this ETF is in full compliance with the Shariah investment principles at all times as Yasaar will be undertaking the Shariah screening at the fund level.’

Yasaar is a Shariah consultancy offering financial institutional clients Shariah compliance services including reviews of financial product structures and advice on amendments to achieve compliance where possible, the provision of support to integrate the amendments proposed to attain Shariah compliance for financial products or transactions, and the provision of a Shariah supervisory board or panel.

Adds Higuchi: ‘We believe the ETF will be well received as it provides Islamic investors with a time-efficient, cost-effective and low-risk investment avenue, based on the use of an indexing investment approach for a basket of reputable Japan companies.’

Chew Sutat, executive vice-president and head of development at the Singapore Exchange, says: ‘This product launch is timely as demand for Shariah-compliant funds in Asia has been rising strongly on the back of increasing interest from Islamic investors from the Middle East. It brings the total number of SGX-listed ETFs to 19 and expands on our current suite of products offering investors convenient access to Asian markets.’

Yasaar chief executive Majid Dawood adds: ‘This launch is positive in many ways, being the first Islamic ETF to be launched by Daiwa and also the first to be listed on SGX. We are very enthusiastic about our continued involvement with SGX and its pioneering offerings to cater to the requirements of the Shariah-compliant market.’

While the ETF has been created to cater to the expanding needs of Islamic investors for greater investment alternatives, Daiwa Asset Management (Singapore) expects it will also appeal to non-Islamic investors internationally, offering exposure to top-tier companies and sector diversification for professional and retail investors in Japan’s stock market.

Daiwa Asset Management of Japan is the investment adviser for the ETF and will draw on its track record in managing ETFs to provide assistance and advice to the Singapore subsidiary with respect to the management of the investments and operational processes of the fund. DBS Trustee has been appointed the fund’s trustee, custodian and registrar.

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