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Islamic asset management to gain more traction in Asia, says Cerulli


Amid the excitement in 2014 about the various regional fund passporting schemes in Asia, one trend that slipped under the radar was the continuing development of the Islamic asset management space in Southeast Asia and, in other parts of Asia.

Shariah fund assets under management in Malaysia, the largest such market in the region, almost doubled to MYR47.1 billion (USD14.3 billion) in October 2014, from MYR24 billion in 2010. While growth in the country has mostly been driven by the tied-agency force of Public Mutual, smaller managers have also emerged in Malaysia, making the space more vibrant.

From a region-wide perspective, the Islamic mutual fund space has started to stir in Hong Kong too, five years after a memorandum of understanding was signed between Hong Kong's Securities and Futures Commission and Malaysia's Securities Commission to foster development of Islamic fund management in Hong Kong. 

In May 2014, Public Mutual announced that it was offering its Islamic equity unit trust fund, the Public Ittikal Fund, for the first time in Hong Kong. Shortly after, in June, RHB Asset Management launched the RHB-OSK Islamic Regional Balanced Fund, making it Hong Kong's first Shariah-compliant balanced fund. 

Meanwhile, Maybank Asset Management has reportedly entered into a pact with Hong Kong-based Bosera Asset Management to jointly develop funds investing in Shariah-compliant equities within ASEAN and Greater China. The Greater China and ASEAN Islamic equity fund is expected to be initially launched in Malaysia during the first quarter of 2015, and it will subsequently be registered in Hong Kong. 

Cerulli believes that these developments are significant as they coincide with growing interest in Islamic products among authorities in major markets. For example, the Hong Kong government announced the successful offering of its inaugural sukuk (Islamic bond) under the Government Bond Programme in September 2014. This was preceded by Britain becoming the first country outside the Islamic world to issue a sovereign sukuk.

Such developments are landmark moments as they represented a changing perspective on Shariah products as an asset class: Having key global financial centres involved in Islamic finance show that such instruments can be utilised just like any asset class and, point to the growing relevance of such products in today's financial markets.

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