MANAMA: With demand for Islamic funds projected to reach $185 billion, Islamic funds expected to reach $77 billion by 2019, according to Thomson Reuters Global Islamic Asset Management Outlook Report.
The report, which released on the sidelines of the 11th Annual Edition of the World Islamic Funds and Financial Markets (WIFFMC) being held in Manama, indicated that Malaysia and Saudi Arabia hold 69% of total Islamic funds under management.
According to the study, Islamic funds are a US$60 billion industry forecasted to grow to at least US$77 billion by 2019, while the latent demand for Islamic funds is projected to grow to US$185 billion. There are substantial growth opportunities but the industry will struggle to reach its potential in the near- to mid-term to bridge the US$108 billion demand-supply gap.
The study is based on a survey of key asset managers, investors, and other market players such as regulators, consultants, and financial institutions. Despite the financial crisis, the Arab Spring in the MENA region and the Euro crisis, the majority of investors and asset managers still believe that performance and efficiency during the past five years remained the same or surpassed expectations. Building on this momentum, most asset managers are willing to increase their Islamic investment holdings in the next 12 months.
Investors and asset managers chose the GCC as their preferred investment destination, with Sukuks and equities being the preferred asset types for 2015 and 2016. Most asset managers also highlighted a preference for a more supportive Shariah framework within their markets.
“The report highlights key areas of opportunity available to the Islamic asset management industry, including Islamic wealth management, private equity, crowd funding, sustainable investing, and socially responsible investments. Almost 70% of Middle Eastern wealth is transferred overseas. To attract this wealth, Islamic asset managers need to compete with institutions overseas by providing both attractive yields and a superior level of service quality and product customization,” Nadim Najjar, Managing Director, Middle East and North Africa, Thomson Reuters, said.
“The Global Islamic Asset Management Outlook 2015 highlights the key challenges and opportunities in the asset management space. The report highlights the current and forecasted demand-supply gap, which is projected to grow to US$108 million by 2019, and suggest strategies and areas of focus that the industry should consider to grow to its full potential,” Dr. Sayd Farook, Global Head of Islamic Capital Markets for Thomson Reuters, said.