New Shariah fund launches stabilize in 2025
After surging during the COVID-19 pandemic period and implemented as a defensive strategy backed by tangible assets later to capitalize on the economic upturn, the number of new Shariah compliant fund launches stabilized in 2025, according to an analysis by the IFN Investor Funds Database.
Chart 1: New Shariah fund launches 2016-2025
Source: IFN Investor Funds Database
The surge during the four years, starting 2021, was mainly due to the launch of equity funds – with the top number of issues coming out of Malaysia, Saudi Arabia and the UK.
For Malaysia, PMB Investment CEO Hang Tuah Amin Tajudin said, “The 2021 spike was a one-off initial post-COVID-19 rebound.”
Table 1: New Shariah fund launches 2016-2025
| Country | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total by country |
| Indonesia | 19 | 20 | 21 | 21 | 10 | 19 | 14 | 23 | 18 | 3 | 168 |
| Luxembourg | 6 | 1 | 1 | 2 | 5 | 12 | 6 | 10 | 10 | 2 | 55 |
| Malaysia | 15 | 23 | 22 | 31 | 24 | 71 | 59 | 43 | 25 | 15 | 328 |
| Pakistan | 11 | 11 | 7 | 6 | 10 | 16 | 15 | 30 | 18 | 28 | 152 |
| Republic of Ireland | 0 | 0 | 1 | 1 | 1 | 5 | 16 | 26 | 12 | 3 | 65 |
| Saudi Arabia | 9 | 12 | 21 | 12 | 12 | 9 | 10 | 23 | 40 | 13 | 161 |
| Turkiye | 5 | 19 | 51 | 4 | 12 | 8 | 17 | 26 | 17 | 5 | 164 |
| UAE | 0 | 3 | 1 | 1 | 4 | 1 | 8 | 2 | 3 | 16 | 39 |
| Others | 14 | 6 | 11 | 13 | 16 | 15 | 14 | 19 | 25 | 7 | 140 |
| Total by year | 79 | 95 | 136 | 91 | 94 | 156 | 159 | 202 | 168 | 92 |
Source: IFN Investor Funds Database
“Ultra-low interest rates, excess liquidity and a strong market recovery after the first pandemic lockdown eased pushed fund managers to rush out new Shariah funds to capture renewed investor optimism and pent-up retail demand. This made 2021 an unusually high base, so the decline afterward is mainly a return to normal, not a structural slowdown.”
Meanwhile, Ireland gained from the UK’s exit from the European Union as of the 1st February 2020 – with a total of 41 British-origin new Shariah funds domiciled in Ireland during the 2021-2025 period. The increase in the UK’s Shariah fund launches also coincided with the fund managers there exploring alternative investor channels after reduced access to its traditional European investor base.
In Saudi Arabia, a hike in new fund launches tracked the domestic economy’s transition away from oil – where work on several mega-projects began and in line with the government’s push to redeploy available massive capital base locally.
With the impact fading from the confluence of these three major factors, 2025 saw the number of new fund launches stabilizing again.
“Fewer new Shariah funds are being launched mainly because fund managers have become more careful in new launches, not because demand is falling,” said Hang Tuah.
Post-pandemic, “high Islamic deposit rates made cash more attractive, so new funds are harder to sell unless they clearly offer better returns.”
Within Malaysia, such stiff competing factors made “many managers focus on keeping existing investors and merging smaller funds, while new ideas are being launched through wholesale or private mandates instead of retail funds. Malaysia also had a very high number of launches earlier, so the drop now looks bigger.”
Chart 2: New Shariah fund launches in 2025
Source: IFN Investor Funds Database
Specifically for 2025, Pakistan led with the highest number of new Islamic fund launches – prompted by that nation’s economy mandated to be fully Shariah compliant by 2028. Other top nations for new Shariah fund launches are the UAE (16), Malaysia (15) and Saudi Arabia (13).
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