Fitch Ratings-Dubai: Islamic funds globally had USD105 billion in assets under management (AUM) at end-1H23 with its global share concentrated in Malaysia (27.2%) and Saudi Arabia (18.2%), Fitch Ratings says in a new report.
Islamic funds’ AUM fell by 4% qoq in the Gulf Cooperation Council (GCC), Malaysia, Indonesia and Pakistan, while conventional funds’ AUM fell by 6%. This is due to investor outflow mainly due to rising interest rates and financial market volatility. Islamic funds also face specific-challenges such as limited investment options due to negative sharia-filters and lack of economies of scale.
“Islamic funds have significant share in a number of Muslim-majority countries. However, the segment – both conventional and Islamic funds – lags behind in many of these markets compared to western centres, with the Islamic funds having its own gaps.” said Bashar Al-Natoor, Global Head of Islamic Finance. “Islamic funds are different from conventional funds due to the need to ensure sharia-compliance of the underlying portfolio, contractual relationships, obligations, and fee structures, among others. An extra layer of cost is present due to sharia governance”.
Islamic funds held the largest share of total public funds in the GCC at 76.5% as of end-1H23 (based on AUM), with the balance in conventional funds. Islamic funds share was also sizeable in Pakistan (41%), Malaysia (32%), and Indonesia (8%). ESG-labelled Islamic funds was USD6.2 billion.
‘Islamic Asset Management Dashboard: 1H23’ is available at fitchratings.com or by clicking the link above
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Matt Pearson
Senior Associate, Corporate Communications
Fitch Group, 30 North Colonnade, London, E14 5GN
E: matthew.pearson@thefitchgroup.com
