MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

Sharia Compliant Funds
The predominance of Islamic funds in the GCC correlates with the concentration of
wealth in the region. Since the Asia-Pacific region has the largest Muslim population, the
high number of Islamic funds registered for sale in the region is not surprising. And,
according to the World Islamic Competitiveness Report by Ernst & Young, the Islamic
finance infrastructure is relatively developed in only a few countries, mainly in the GCC
and Malaysia, further explaining the concentration of Islamic funds.
Since Islamic investors have a limited scope of products in which they can invest, they
often resort to Islamic products such as sukuk and fixed-term deposits as well as real
estate investments. These investors need access to other products such as mutual funds
if they want to diversify their portfolios. This demand is shown by a number of surveys
that have concluded that Muslims living in Western countries complain about the lack of
Islamic products offered in their countries. This demand is creating opportunities for
Islamic fund managers who might currently concentrate their activities only in large
markets for Islamic funds, such as Malaysia and the GCC.
Estimated Net Flows in Shariah-Compliant Funds
(US$ million)
4,500
3,500
Fund of Funds Mixed Assets Bonds
Other Money Market Equity
US$ billion
2,500
1,500
500
(500)
(1,500)
2008 2009 2010 2011 2012E
Source: Lipper, a Thomson Reuters company
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