Funds

Malaysia Tax Plan Makes Funds Wary of Inflation: Islamic Finance

Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases. Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April. One-year interest-rate swaps climbed to a six-year high of 3.87 percent this week. Experts recommend buying Islamic bonds in the middle of the so-called yield curve, which are less exposed to losses from inflation and interest-rate moves. The government will implement a 6 percent goods and services tax as part of efforts to cut the fiscal deficit that included scrapping fuel subsidies.

‘Politicising’ Quran-compliant fund

Investors’ antennas had gone up in the investment markets when SBI Mutual Fund announced first official launch of a stock fund structured in line with Islamic rules (Shariah Equity Fund) in the first week of December. But this mutual fund arm of India’s largest bank, State Bank of India, took no time to defer the launch of SBI Shariah-compliant fund on the pretext of its ‘restructuring in a better and more attractive format’ is not digestible. This is a statement which makes even an ordinary mind to believe that the reason for deferring the offering could be political. Meanwhile, the two actively-managed Shariah mutual funds in the market have outperformed the Sensex recently.

SBI set to launch Shariah-compliant mutual fund

The State Bank of India (SBI) will launch a Shariah-compliant mutual fund next month, the first time a state-owned bank will roll out an Islamic financial instrument for the country’s estimated 170-million Muslim population. An SBI official said the country’s biggest lender had received all clearances to launch its Shariah Equity Fund, including from the Reserve Bank of India and the government. The All India Muslim Personal Law Board (AIMPLB), the country’s apex body on Shariah law, lent its support to the move. The Bombay Stock Exchange launched India’s first Shariah index — S&P BSE 500 Shariah — in May 2013. Over the past year, it has given a return of a robust 46%.

US investor backs European Sharia mezzanine fund

An unnamed US investment manager has committed $100m (€80.4m) to a Sharia-compliant mezzanine real estate fund managed by Gatehouse Bank. The closed-end fund, which will invest in western European financings, is the first mezzanine product to comply with Sharia principles. Gatehouse will source, arrange and structure loans up to 85% loan-to-value over the next 18 months. The main principle of Sharia investment involves avoiding assets where more than 10% of the property involves the sale of alcohol, pork or tobacco. With three to five-year terms, the loans are expected to generate net IRRs of between 6% and 10%.

CastleHill plans £100m shariah-compliant student accommodation fund

CastleHill Capital, a fund with bases in the UK and Middle East, aims to launch its first shariah-compliant UK student accommodation fund in early 2015. The fund is part of the CastleHill Group, which runs student recruitment services in partnership agreements with over 50 universities. CastleHill Capital said it would leverage these strong relationships to offer high quality student accommodation in the UK. Clyde & Co, an international law firm, has been appointed on the role of advisory on the creation of the fund.

NBAD Islamic MENA growth fund named Best Islamic Fund

The NBAD Islamic MENA Growth Fund has been named the Best Islamic Fund 2014 by Global Islamic Finance Awards. The Fund invests in a balanced portfolio of equities based on Islamic Shari’ah principles, with a view to achieve capital growth, primarily in the MENA. NBAD’s award-winning Asset Management Group, designed and manage NBAD Islamic MENA Growth Fund and various other products, which include conventional and Islamic offerings ranging from equity funds and fixed income funds to exchange-traded funds (ETF), structured products, and discretionary portfolios and advisory services. NBAD’s Asset Management Group manages assets in excess of AED 11.28 billion.

Malaysia's Maybank launches first USD sukuk mutual fund

The asset management arm of Malaysia's Malayan Banking Bhd has launched its first U.S. dollar-denominated mutual fund that invests in Islamic bonds. The new fund will invest partly in sukuk issued from Gulf countries. This is rare for Malaysian funds, because there is an abundant supply of local ringgit-denominated sukuk, but demand for dollar-denominated paper has been growing. The fund will initially be available to Malaysian investors only, although the firm plans to distribute the fund overseas as well, Nor' Azamin Salleh, chief executive of Maybank Asset Management Group Bhd, said.

Maybank Islamic's RM20m to Waqf fund

Maybank Islamic Bhd will provide RM20 million of seed capital to a Waqf Fund which will be invested into investment portfolios, to include fixed income, equities, balanced fund and real estate. The local financial institution said that majlis Agama Islam Wilayah Persekutuan (MAIWP) will be the trustee of the Waqf fund while the bank will be the project manager. Profits or capital yield from the investment portfolio will be used to fund programmes related to development of educational and health care infrastructures, as well as to develop young entrepreneurs. Maybank Islamic Chief Executive Officer, Muzaffar Hisham said Waqf was one of the potential investments which can be developed to fund various economic activities for the benefit of the community.

DIFC introduces new fund to target wealthy investors

The Dubai International Financial Centre has launched the Qualified Investor Fund (QIF) targeting wealthy investors. It requires a registration process of 48 hours. QIFs offer a short time to market solution for asset managers. The DIFC houses over 400 regulated entities and over a 1,000 companies with over 80 firms managing assets and over 2,000 funds marketed from the DIFC.

Some Win, Some Lose In Gulf’s Sukuk Mutual Fund Market

Funds dedicated to sukuk are a rare breed, with only 20 currently marketed in the Gulf. The average size of a sukuk fund in the region is just $43 million, but collectively they serve as a measure of secondary market activity and a barometer for the larger and more lucrative business of private investment mandates. As the market sees sukuk funds continue to perform well, in line with, and on occasion outperforming their conventional peers, a significant rise over the next five years in segregated account mandates is expected to take place. The largest six sukuk funds oriented to Gulf investors hold almost half of all the assets of such funds.

Saudi's Sedco launches first in-house Islamic fund

Jeddah-based Islamic investment firm Sedco Capital has launched the first fund managed by its own in-house team, looking to bulk up its asset management capabilities. The Gulf equities fund, domiciled in Luxembourg, has an intial $30 million in assets and is Sedco's 14th fund overall. It is part of Sedco's strategy to source two-thirds of its assets under management from outside Saudi Arabia in four to five years. Previously, Sedco relied on external advisors for its funds. Sedco Capital said it had also signed the United Nations' Principles for Responsible Investment (UN PRI), becoming the first Gulf-based Islamic asset manager to do so.

NBAD launches Shariah dividend fund

The National Bank of Abu Dhabi (NBAD) has launched the NBAD Shariah MENA Dividend Leader Fund, which invests in dividend-paying companies traded on MENA equities markets. The Fund is inspired by and modeled after NBAD MENA Dividend Leader Fund (MDL) which was recently voted Newcomer Fund of the Year 2013 by Zawya. The NBAD Shariah MENA Dividend Leader Fund will invest in bourses of Saudi Arabia, UAE, Qatar, Oman, Kuwait, Egypt, Jordan, Morocco and Tunisia. The Fund is actively managed by the Equity desk of NBAD 's Asset Management Group. NBAD Shariah MENA Dividend Leader Fund is UCITS IV compliant - regulated by the Central Bank of Ireland. Northern Trust Group acts as the Fund's administrator and custodian.

Big potential in Islamic ETFs

Industry players are upbeat about Islamic Exchange-Traded Funds (ETFs) but say a lot needs to be done to raise awareness and excitement about the investment fund. Generally, however, Malaysia has not been enjoying much success when it comes to ETFs since the first product was listed on the local bourse in 2005. Global ETF experts were in unison in pinpointing limited investor awareness as the culprit for the fund’s lack of success. The Malaysian ETF market stands at RM1.03 billion of assets under management (AUM) as at August 2014, versus the global figure of more than US$3 trillion (RM9.6 trillion) by year-end. On the global stage, ETFs have been growing at a phenomenal rate, estimated at some 20 per cent of compounded annual growth rate since its debut in 1989.

Lotus Halal traded fund, expanding frontiers of capital market

Nigeria-based Lotus Capital Limited recently launched the first sharia compliant exchange traded fund in sub-Saharan Africa – the Lotus Halal Equity Exchange Traded Fund (“LHE ETF”), with a target of raising about N1.5 billion during the initial offer period. The offer opened August 15, 2014, and closes September 11, 2014. Subscription is at an indicative unit price approximately equal to 1/200th of the value of the NSE-Lotus Islamic Index (“NSE LII”) on the day preceding the subscription. The LHE ETF would be listed and traded on the Nigerian Stock Exchange (NSE) and will contribute to overall market capitalisation and the global exchange traded fund universe.

Al Rajhi Capital Launches First Sukuk Fund

Rajhi Capital has started the offering period for the Al Rajhi Sukuk Fund. The Sukuk fund is an open ended fund designed to capture the opportunities available within the Shariah-compliant universe of sovereign, quasi-sovereign and corporate Sukuk, issued locally, regionally, as well as globally. The Fund will also invest in other income generating assets, within its mandate comprising of Commodity Murabaha Placements, Islamic Placements, Structured Islamic Products and Commodity Mudaraba Funds. The benchmark of the Fund is 3 month USD LIBOR 75 bps. Al Rajhi Capital is offering a special incentive whereby the subscription fees are waived for all new subscriptions until September 11 2014.

Our polio funds will run out in two months: Pakistan

Pakistan's health ministry has said that if new funds are not arranged for the delayed anti-polio campaign, it is likely to halt after two months. The Economic Coordination Council (ECC) was supposed to approve funds for the campaign in the second week of August, but it has not been allocated owing to a political crisis. The Islamic Development Bank, Japan and other organisations were to provide a loan of $326 million, with the interest on the amount to be paid by the Bill and Melinda Gates Foundation. A total of 115 polio cases has been registered in Pakistan this year. According to the National Institute of Health (NIH), only 39 polio cases were registered last year.

Investors fail to tap from bourgeoning ETF markets

The Nigerian Exchange Traded Funds (ETF) market has shown potential for growth, though many investors are yet to recognise its promise. In the less than four years since the market recorded its first entrants into the ETF space, there are three Exchange Traded products valued at N3.209 billion or 0.0178 percent of the total market capitalisation of the Nigerian Stock Exchange (NSE) as at August 6, 2014. Comparison of statutory charges (sell side) on equities against ETFs shows a difference of 0.5964 percent in favour of ETFs; while on the buy side, the charges are the same. On the sell side, charges to equities are 0.7050 percent, while ETFs are 0.1086 percent; on the buy side, the charges are same at 0.3750 percent.

SEDCO Capital outsources external Shari’a Audit of its $160 million real estate funds to Shariyah Review Bureau

SEDCO Capital announced assigning the External Shari’a Audit of its $160 million real estate funds to Shariyah Review Bureau (SRB). The two funds which SRB will be periodically auditing the implementation of the Shari’a h guidelines are SEDCO Capital Partners Group Opportunities Fund and SEDCO Capital Real Estate Income Fund I. SRB will independently ensure that the investments, Zakah verification, implementation of the modalities and reporting functions are conducted in accordance with the Shari’a guidelines set out by SEDCO Capital Shari’a Supervisory Board.

Expectation high as Lotus Halal traded fund lists on NSE

Hajara Adeola, managing director, Lotus Capital Limited, has spoken on the benefits of the forthcoming listing of first Sharia Compliant Equity Exchange Traded Fund, the Lotus Halal Equity Exchange Traded Fund (LHEETF) on the floor of the Nigerian Stock Exchange via an initial offer for subscription. he TLHE ETF will be very liquid, he said, since its units can be bought and sold any time on the Exchange. More so, investors who hold a minimum of 5,000,000 units of the LHE ETF can exit by exchanging their LHE ETF units for the relevant number of the Fund’s underlying shares. Investors can either subscribe via a cash subscription or via in-kind subscription by the delivery of the stocks of the constituent companies of the NSE- LII in exchange for units of the ETF.

Lotus Capital signs 100m units of Halal Equity Exchange Traded Fund

Following the receipt of the Securities and Exchange Commission clearance of the Offer Documents in respect of the proposed initial offer for subscription of 100 million units of the Lotus Halal Equity Exchange Traded Fund, Lotus Capital Limited has announced the successful hosting of the signing ceremony in respect of the proposed initial offer. The board of directors of the company and relevant professional parties, including Vetiva Capital Management Limited (issuing house to the offer), were present to execute the offer documents during the signing ceremony. Lotus Capital, upon receipt of final approval from the Securities and Exchange Commission, plans to launch the Lotus Halal Equity Exchange Traded Fund, an Exchange Traded Fund (“ETF”) based on the NSE Lotus Islamic Index.

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