Key highlights:
- Growth, income and balanced funds are preferred
- Malaysia dominates global Islamic mixed assets fund sector
- Uptrend seen for fixed income securities
Overview
Global Islamic mixed asset investment schemes are showing some realignment after the recent cut in interest rates, triggered by the US Federal Reserve.
High inflation and interest rates in the past two years had brought about cheaper fixed income securities prices as investors demanded higher yield to compensate. As that pressure is easing, there is an uptrend seen for fixed income securities like Sukuk, as well as for equities and commodities.
Chart 1: Islamic mixed assets by fund type
Source: IFN Investor Funds Database
The global Islamic mixed asset funds market is composed of various fund types, each serving distinct investor needs.
Growth funds dominate the market, focusing on capital appreciation and accounting for approximately 40.23% of the total assets under management (AuM), valued in total at US$3.75 billion.
Income and balanced funds follow closely, with nearly equal AuM figures of US$2.30 billion and US$2.32 billion respectively. Lastly, retirement funds represent 9.75% of the market, amounting to a total of US$908.88 million.
Chart 2: Islamic mixed asset funds by country
Source: IFN Investor Funds Database
Looking into specific jurisdictions, the IFN Investor Funds Database reports a total of US$9.32 billion in the Islamic mixed asset funds market – with Malaysia and Saudi Arabia leading the sector.
Malaysia dominates the market, accounting for approximately 36.98% of global Islamic mixed assets, valued at US$3.45 billion. Saudi Arabia closely follows in second place, contributing 33.98% with a total of US$3.17 billion.
Turkey ranks third, managing 52 funds with a combined value of US$948.14 million. Pakistan maintains a strong foothold with 28 funds totaling US$374.40 million. The UAE hosts five Islamic mixed asset funds valued at US$325.35 million, while Indonesia rounds out the list with 19 funds managing US$170.77 million.
AuM growth
The IFN Investor Fund Database highlights a notable expansion across all regions in the Islamic mixed asset funds market. The Africa, Asia Pacific and Middle East regions experienced significant growth, with their AuM rising by 15.8%, 12.42% and 9.52% respectively.
In Europe, Islamic funds in Turkiye drove the regional AuM total to cross the US$1 billion-mark, underscoring Turkey’s pivotal role in the region’s market growth.
- Africa: Up by 15.38% to US$584.69 million from US$506.74 million.
- Asia Pacific: Up by 12.42% to US$4.27 billion from US$3.8 billion.
- Europe: Up by 18.24% to US$75.17 million from US$63.58 million. The IFN Investor tracked 52 extra funds from Turkiye, increasing tracked AuM to US$1.03 billion.
- Middle East: Up by 9.52% to US$3.45 billion from US$3.15 billion.
The Americas do not have any Islamic mixed asset funds at the time of writing. Turkiye funds are recent tracking additions to the IFN Investor Fund Database.
Table 1: Top Islamic mixed asset funds in Q3 2024 by AuM percentage growth
| Fund | Q2 2024 AuM (US$) | Q3 2024 AuM (US$) | % Change |
| Takafulink Dana Ekuiti | 595.25 million | 693.06 million | 16.43% |
| Maybank Global Mixed Assets-I Fund (MYR) | 49.03 million | 56.45 million | 15.15% |
| Takafulink Dana Urus | 139.10 million | 157.88 million | 13.50% |
| AIA PAM-Islamic Moderate Fund | 28.04 million | 31.79 million | 13.37% |
| BIMB Dana Al-Falah | 534,180.51 | 593,367.41 | 11.08% |
Source: IFN Investor Database
Table 2: Largest Islamic mixed asset funds by AuM in Q3 2024
| Fund Name | Fund manager | AuM (US$ million) |
| Al Rajhi Growth Fund | Al Rajhi Capital | 1,345.26 |
| Takafulink Dana Ekuiti | Prudential BSN Takaful | 653.68 |
| Public Islamic Asia Tactical Allocation Fund | Public Mutual | 548.26 |
| Al Rajhi Monthly Distribution Fund | Al Rajhi Capital | 410.60 |
| Al Rajhi Monthly Distribution Fund 2 | Al Rajhi Capital | 328.39 |
Source: IFN Investor Database
Outlook
Investment companies expect the US rate to remain low with a robust labor market, plus the European Central Bank and Bank of England are likely to cut interest rates further, albeit gradually. The combination of a low interest environment and steady growth supports the equities market across multiple regions.
Holders of fixed income securities like Sukuk and bonds may enjoy higher trading prices moving into 2025 in the light of gradually decreasing interest rates as dovish policies flood the global market.
Cheaper capital may promote a shift to growth focused investment, particularly equities as borrowing costs are reduced for institutions. If these dovish policies were to negatively impact risk-free rates and investors embark on a buying spree for fixed income instruments, this asset class could be more attractive than before.
Fund managers worldwide will keep an open eye as the year 2025 unfolds to discover hidden gems or opportunities.
This report was produced by Elliot Yip and Aravinth Rajendran, financial data analysts at IFN Investor.
