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Tuesday, 2 July 2013

Growth potential for Islamic fund management

Islamic wealth management has great potential to be the next big thing but requires innovation to allow for its expansion, according to a banker from CIMB Bank Investment Bhd.

Shahril Simon, who heads group asset management at the bank’s CIMB Islamic division, said one of the key policy recommendations in Malaysia stated the support for the growth of Islamic funds and wealth management industry.

“Islamic wealth management is the next big thing and is part of the innovative solutions in Islamic finance and part of Islamic money management.

“Over the next decade, the Islamic capital market is expected to sustain double-digit growth,” he said at a panel discussion at the Labuan IFC Wealth Management Forum 2013.

Fund management or assets under management is valued at RM505.1 billion in Malaysia, while net asset value of the unit trust industry stood at RM294.9 billion in 2012.

Islamic assets under management (AUM) accounted for about 16% of the industry’s total assets under management or RM79.6 billion.

There are 18 Islamic fund management companies operating in Malaysia including Aberdeen Islamic Asset Management Sdn Bhd, AmIslamic Fund Management Sdn Bhd, RHB Islamic Asset Management Sdn Bhd, BNP Paribas Islamic Asset Management Sdn Bhd and KFH Asset Management Sdn Bhd.

Shahril noted there are hurdles that have to be removed to ensure the expansion of the segment in Malaysia, where Muslims are increasingly seeking Shariah compliant products.

He said it was critical to build domestic take-up capabilities for innovative domestic products and solutions to pursue the development of the Islamic fund management industry.

Shahril said Islamic wealth management is based on the Islamic principle of religion, life, intellectual progeny and property, which showed that Islam called for the efficient management of wealth from its beginning.

The Islamic capital market, at RM1.4 trillion, has enjoyed greater internationalisation through wider participation of foreign sukuk issuers from Singapore, the United Arab Emirates, Bahrain and Kazakhstan, he noted.

Given the fact that over 88% of Bursa Malaysia stocks are Shariah-compliant, which includes blue chips from various sectors. there are no limited supply of investment avenues that could benefit the investors in the Islamic wealth management arena.

Trends in Malaysian wealth favour a more prominent role for Shariah-compliant asset management while CIMB aims to expand AUM by 43% over a three year period, according to a Datamonitor Research paper dated 2012.

(The Malaysian Reserve / 01 July 2013)

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