Malaysia tops shariah funds list
Thursday, 19 February 2009 12:35pm
Malaysia may have overtaken Saudi Arabia to boast the highest number of shariah funds in the world - but the Asian Islamic country has a long way to go in building up assets for each of its 145 funds, according to a new report.
November figures from a Cerulli Associates report noted that the number of shariah funds in Malaysia totaled 145, compared with Saudia Arabia's 131. These range from investments in money markets and sukuk (bonds) to regional and global equities.
Despite Malaysia's large number of shariah funds, the country has a long road to trek if it wishes to surpass Saudia Arabia funds' asset size. The AlAhli Saudi Riyal Trade Fund for instance is the world's largest with $5.6 billion in assets under management as of October last year. The Arabic fund is nine times the size of Malaysia's largest fund - the Public Ittikal Fund.
In total, Malaysian-domiciled Shariah funds manage around $7.2 billion in assets, compared to the $22 billion domiciled in Saudi Arabia.
"While the Malaysian shariah market has shown impressive growth, managers need to do more to build assets in each of its shariah funds - rather than simply continuing to launch more funds," said Cerulli Associate managing director, Shiv Taneja.
Over the past few years, Malaysia has been ramping up its Shariah fund offerings in a bid to establish itself as a center for Shariah fund manufacturing, noted the report.
Today, Malaysia tops the list for most highly developed regulatory structure for Islamic finance in the world. The country has attracted more than eight international Shariah managers by offering tax incentives, among others.
While Malaysia's interest in setting up as an Asian-based Sharia investment hub in competeition to Saudi Arabia may seem ambitious, analysts have reported there are more Muslims in the greater Asian region than throughout the Middle East, giving Malaysia a very competitive geographical advantage.
Ruth Liew
