Islamic fund expansion outpaces global fund growth

Islamic fund expansion outpaces global fund growth

Dubai: Assets under management (AUM) in Islamic mutual funds have increased substantially, having peaked at around $30 billion at end-Q3 2021 before slipping to around $120 billion at end 2021, according to data from Fitch Ratings and Lipper. Fitch Ratings estimates that the growth rate of Islamic funds (84 per cent) has exceeded that of the broader global mutual fund industry (68 per cent), based on the latest comparable data for the five years to end-Q3 2021, based on Lipper and ICI Global data. Saudi Arabia and Malaysia remain the pre-eminent Islamic fund domiciles worldwide, reflecting strongly established local markets. Offshore markets, such as Jersey and Luxembourg, also have nascent Islamic fund markets. Jersey is an Islamic exchange-traded fund (ETF) hub, where multiple commodity ETFs (notably gold ETFs) claim Sharia status. Luxembourg has a broader Islamic mutual fund base (see: European Islamic Funds Industry Led by Luxembourg, published 9 December 2021). Money market funds (MMFs) are the largest Islamic fund type. This is largely driven by Saudi Arabia being the largest Islamic fund domicile, and by MMFs being the dominant fund type in Saudi Arabia. Around 83 per cent of Saudi Islamic fund AUM was invested in MMFs at end-Q4