Steady sails for SIB Najah with Shariah push

Despite being the largest East African economy, Kenya still lacks a strong push into the Shariah compliant investment landscape as there is fierce competition from better-established conventional fund managers.

A recent entrant into this space is Standard Investment Bank (SIB), which made the move to launch SIB Najah in August 2023 – an Islamic investment banking window offering Shariah compliant investment products, targeting institutional and high net worth investors.

This strategic direction was adopted to also be in line with the Kenya’s Capital Market Authority’s 2030 initiatives toward market inclusivity and wider investment options, SIB Islamic Investment Banking Executive Director Abdullahi Omar Adan told IFN Investor.

Aiming to tap into this growing market potential comes naturally to Abdullahi, who was among the pioneers at Kenya’s first fully-Islamic outfit – Premier Bank (formerly known as First Community Bank).

Moving quickly with SIB Najah, the Mansa-X Shariah Fund was launched in October 2023 and Abdullahi said the response from investors has been steady for both the local Kenyan shilling-denominated and US dollar funds.

Assets under management (AuM) for the local currency fund was little changed at KES259 million (US$1.99 million) as at the 30^th June 2024 while the other AuM grew to US$1.04 million compared to US$750,000 at the end of Q1 2024.

“Annualized since the fund began in October 2023, our product allows access to global markets as well as multiple asset classes. So far, the return for the Mansa-X Shariah KES Fund is 13.96% per annum, net of fees. The Mansa-X Shariah USD Fund return is approximately 9.32% per annum.”

This Shariah fund, which was adapted from SIB’s flagship Mansa-X fund launched in 2019,invests in quoted Halal equities, Islamic indices such as the FTSE Shariah Global Equity Index, Islamic private equity, Sukuk, as well as commodities such as precious metals, agricultural products, and energy resources, Islamic exchange-traded funds and Islamic REITs.

Abdullahi admitted challenges remain as the Mansa-X Shariah fund reaped a return of 2.26% in Q2 2024 while the associated conventional fund delivered a net return of 4.99% in the same period.

Tracking the Dow Jones Sukuk Index, which posted moderate gains of 0.64% during this latest quarter, he said the Shariah fund had a more challenging start in April amid global market downturns and its “resurgence in performance was underpinned by moderate issuance levels across the three-month period”.

“The fund types we have observed investors attracted to in the local market are mainly dealing with traditional asset classes, most of which are interesting-bearing such as Treasury bills and bonds. These funds, also called money market funds, are very popular in Kenya.”