Key Highlights
- Global fixed income and Sukuk funds market valued at US$20.23 billion at end of Q3 2024
- Asia Pacific grew the most in Q3 2024
- Development of digital Sukuk has become a key growth driver
Overview
Compared to Q2 2024, global Islamic fixed funds exhibited better performance in terms of assets under management (AuM) growth in Q3 2024 – as these investments are underpinned by a robust Sukuk landscape.
The global Sukuk market, a cornerstone of Islamic finance, has experienced significant growth in recent years, solidifying its position as one of the largest and most influential sectors within the broader financial landscape.
According to Fitch Ratings statistics, the global outstanding Sukuk market grew 8.5% year-on-year to US$900 billion by the end of Q3 2024. Projections indicate that this category will continue its upward trajectory, with a compound annual growth rate of 12.6% through 2029.
This expansion is driven by a combination of factors, including increased demand for Shariah compliant financial instruments, diversification in funding sources and the growing recognition of Sukuk as a key tool for both investors and issuers.
A major trend shaping the future of the Sukuk market is the increasing focus on sustainability. As the global financial community intensifies its commitment to ESG principles, Sukuk issuances are increasingly aligned with sustainability goals. Analyses conducted using IFN Investor Funds Database suggests that the Islamic fixed income, including Sukuk, funds market sits at US$20.23 billion – showing a 22.18% improvement from Q2 2024 to Q3 2024.
As of Q3 2024, the IFN Investor Funds Database reported a global total of 357 fixed income and Sukuk funds. Malaysia leads the list with the largest number, featuring 101 funds valued at US$5.43 billion.
However, when comparing AuM across jurisdictions, Saudi Arabia holds the highest AuM, with US$6.01 billion from 38 funds. Luxembourg follows with US$2.25 billion across nine funds.
Turkey has a notable presence in the Islamic fixed income and Sukuk market, with 53 funds totaling US$1.76 billion in AuM. Pakistan accounts for 50 funds with US$1.8 billion, while the UAE holds US$1.31 billion in assets. Indonesia, with 54 funds, falls outside the billion dollar club with a total AuM of US$750.45 million.
Chart 1: Largest Islamic fixed income funds market by AuM
Source: IFN Investor Funds Database
Global Sukuk funds currently total US$10.7 billion, spread across 244 funds. Malaysia leads the market, hosting the largest share in both the number of funds and AuM, with US$4.14 billion in 82 funds. Bank Negara Malaysia Deputy Governor Adnan Zaylani reportedly said Sukuk plays a vital role in supporting the country’s economic funding needs.
Turkiye ranks second with US$1.65 billion in 39 funds. Pakistan and the UAE have similar-sized Sukuk funds markets, with each country managing around US$1.13 billion (15 funds) and US$1.11 billion (12 funds) in assets respectively. Indonesia, while home to a large number of funds, faces challenges such as government and capital market debt, resulting in smaller average AuM for its Sukuk funds compared to other markets.
Chart 2: Wholly Sukuk funds by AuM
Source: IFN Investor Funds Database
AuM growth
In Q3 2024, Islamic fixed income and Sukuk funds in the Asia Pacific region saw the largest growth in AuM, rising by 18.73%. This was followed by the Americas, which experienced a 9.77% increase, and Africa, which saw a modest 1.51% gain. In contrast, Islamic fixed income funds in the Middle East experienced a decline, with AuM falling by 4.51%.
- Asia Pacific: Up by 18.73% to US$8.07 billion from US$6.79 billion.
- Americas: Up by 9.77% to US$444.63 million from US$409.62 million.
- Middle East: Down by 4.51% to US$7.37 billion from US$7.72 billion.
- Africa: Up by 1.51% to US$152 million from US$150.71 million.
- Europe: Up by 1.32% to US$1.59 billion from US$1.57 billion.
Note: The IFN Investor Funds Database is tracking an additional 53 fixed income and Sukuk funds from Turkiye as of Q3 2024 – resulting in the AuM tracked for Europe rising to US$3.82 billion.
Table 1: Top performing Islamic fixed income funds by region in Q3 2024
| Region | Fund | Fund manager | Three-month returns (%) |
| Asia Pacific | HBL Islamic Pension Fund | HBL Asset Management | 22.23 |
| Europe | BNP Paribas Cardif Retirement Initial Participation Retirement Investment Fund | BNP Paribas Cardif Emeklilik | 12.4 |
| Middle East | ANB Capital Saudi Sovereign Sukuk Fund | ANB Capital | 6.02 |
| Americas | Amana Participation Institutional Fund | Saturna Capital | 3.55 |
| Africa | 27four Shariah Income Fund | 27 Four Investment Managers | 1.64 |
New players and products
The growing interest in fixed income and Sukuk asset classes within mutual funds has garnered attention from investors worldwide. According to the latest data from the IFN Investor Funds Database, 30 fixed income and Sukuk funds were launched globally in 2024, across 19 asset managers, contributing a total of US$423.34 million in AuM.
The largest number of these funds were launched in Pakistan, which saw a combined total of US$149.91 million across several funds. Indonesia follows with four funds from three asset managers, totaling US$126.38 million.
Turkey and the UK each launched three funds, with AuM of US$36.44 million and US$40.26 million, respectively. Malaysia, Saudi Arabia, Singapore and the UAE each introduced one fund, collectively amounting to US$70.32 million in AuM.
In Q3 2024, the IFN Investor Funds Database recorded the launch of five funds from five asset managers. Pakistan led this quarter with three Islamic fixed income funds and one Sukuk fund, collectively amassing US$19.22 million. Notably, Lunate Capital launched its Chimera JP Morgan Global Sukuk ETF Fund, which at the time of writing is valued at US$3.96 million.
SICO Asset Management, a Bahrain-based company launched the Turkish Shariah opportunities fund which allows investors to tap into Turkey’s fixed income market.
Regulatory development
The theme of debt instrument digitalization in the conventional space is nothing new, such as the European Investment Bank’s EUR50 million (US$53.59 million) bond through HSBC’s platform and Hong Kong’s HKD800 million (US$102.90 million) green bond via Goldman Sachs. This method of financing in fact gained traction due to the quick liquidity turnover period when depositors choose to remove funds.
Likewise, the development of digital Sukuk has become a key area of growth. Platforms like Fusang – who are one of the earliest players for Sukuk digitalization – are utilizing blockchain technology and facilitating the tokenization of Sukuk.
One of the main value propositions for such method of Sukuk digitalization is similar to that of mutual funds, in which mutual funds allow for fractional ownership of certain equities or a diversified pool of equities. This opens up Sukuk markets to a broader base of investors, including those of the retail market.
The tokenization and digitalization of Islamic financial assets pose another challenge for Shariah professionals worldwide to deem whether current practices and structures are playing by ethically acceptable rules.
Early this year, Oman revised their 2016 Sukuk regulation and now allows issuance of Sukuk in any foreign currency so long as convertible to its domestic currency of Omani Rial. The new regulation also demands issuers to retain relevant documentation for a period of 10 years.
Top 10 fixed income Islamic funds by AuM
| Rank | Fund name | Fund manager | AuM US$ (millions) |
| 1 | Riyad SAR Diversified Trade Fund | Riyad Capital | 1,562.00 |
| 2 | Albilad SAR Murabaha Fund | Albilad Capital | 888.67 |
| 3 | Aiiman Income Extra Fund | AlIMAN Asset Management | 819.72 |
| 4 | SNB Capital Diversified Saudi Riyal Fund | SNB Capital | 810.79 |
| 5 | AZ Multi Asset – AZ Islamic Global Sukuk – Accumulation | Azimut Investment | 653.57 |
| 6 | AZ Multi Asset – AZ Islamic Global Sukuk – Income | Azimut Investment | 653.57 |
| 7 | Riyad SAR Trade Fund | Riyad Capital | 557.4 |
| 8 | AlJazira Saudi Riyal Murabaha Fund | Aljazira Capital | 417.52 |
| 9 | Amana Participation Institutional Fund | Saturna Capital | 187.87 |
| 10 | Principal e-Cash Fund | Principal Asset Management | 180.35 |
Top 10 Sukuk funds by AuM
| Rank | Fund name | Fund manager | AuM US$ (millions) |
| 1 | Franklin Global Sukuk Fund – A | Franklin Templeton | 742.30 |
| 2 | Meezan Sovereign Fund | Al Meezan Investment Management | 712.28 |
| 3 | Turkiye Life And Retirement Oks Participation Standard Retirement Investment Fund | Turkiye Hayat Ve Emeklilik | 531.35 |
| 4 | AHAM Aliman ESG Income Plus Fund | AHAM Capital Asset Management | 462.28 |
| 5 | Emirates Global Sukuk Fund (Luxembourg) | Emirates NBD Asset Management Ltd. | 440.61 |
| 6 | Principal Islamic Institutional Sukuk Fund | Principal Asset Management | 428.72 |
| 7 | SC Global Sukuk Fund Class D USD | Sedco Capital | 416.36 |
| 8 | Principal Islamic Lifetime Sukuk Fund | Principal Asset Management | 284.39 |
| 9 | AmanahRaya Syariah Trust Fund | AmanahRaya Investment Management | 270.97 |
| 10 | AmAl-Amin | AmIslamic Funds Management | 256.03 |
