Malaysia Has Majority Of World's Shariah Funds

by Mary Swire, Tax-News.com, Hong Kong

20 February 2009

It has been revealed in a recent report by Cerulli Associates that Malaysia is now the closest rival to Saudi Arabia in terms of Shariah-compliant mutual fund assets, and has overtaken Saudi when it comes to the number of locally domiciled Shariah funds.

The report - entitled 'Shariah Investing: Market Sizing and Analysis - stated that in November 2008, Shariah funds domiciled and managed in Malaysia totaled 145, compared to just 131 in Saudi Arabia.

These range from investments in money markets and sukuk (bonds) to regional and global equities.

Determined to make an impact on the global Shariah industry, Malaysia has, over the past few years, worked to establish itself as a center for Shariah fund manufacturing.

Today, Malaysia possesses the most highly developed regulatory structure for Islamic finance in the world, and has attracted more than eight international Shariah managers by offering a host of tax and other incentives.

However, Malaysian-domiciled Shariah funds are still unable to compete with Saudi funds in terms of asset size; the AlAhli Saudi Riyal Trade Fund is the world’s largest with USD3.6bn in assets under management as of October 2008. This is nine times the size of Malaysia’s biggest fund, the Public Ittikal Fund.

In total, Malaysian-domciled Shariah funds manage USD4.6bn of assets, compared to USD13.9bn held in Saudi funds.

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