Francis Nantha speaks to three individuals to get some indication of why the Islamic asset landscape is gaining a lot of prominence.
Investment trends in multi-ethnic populations — like those in Malaysia and the US — show that Shariah compliant assets are attractive to non-Muslims as well, Saturna Capital Executive Vice-President Monem Salam told IFN Investor.
“There’s a lot of value-add to doing both Shariah and ESG, bringing impacts in a positive way,” which Monem attributed to why the US asset manager’s assets under management grew tremendously over the past three years to US$8 billion currently.
Saturna’s strength and fund flows in recent times have all been on the Islamic side, with less than 5% coming from conventional while 95% of its business is Islamic. Monem said these investments came from both Muslims and non-Muslims.
“They are coming because of our solid returns. As long as we can continue to deliver on Shariah compliance, ESG and solid returns, I do believe we have a long road of net subscriptions in the future. They attract fund flows in ways that other conventional assets will not have.”
From a geographical basis, Monem said the bulk of Shariah-focused investors for Saturna are in North America, the Middle East plus Muslim-majority Asian nations of Indonesia, Malaysia and Pakistan. There have not been as many subscriptions from investors in Africa or Europe.
Physician Faisal Qazi., who invests in Shariah assets from his California base, said he prefers to liaise with asset managers who know and understand Muslim obligations for economic behavior. “It really helps to have knowledgeable Muslims create investment platforms where other Muslims are comfortable.” He appreciated the vetting process conducted at these platforms for Shariah compliant assets, making it convenient for individual investors like him because it is a value issue to be considered critically — rather than tax or asset growth factors, because these are not goals or functions of a typical investment focus.
Noting that most people still approach investments from a savings perspective for specific aims like retirement or tertiary education, Faisal said a Shariah portfolio had done well for him because these are largely asset-based and are not as vulnerable to downside risks. But he noted that non-economic risks have caused issues for Shariah-related investments and he cited the January 2024 ban by Fidelity Charitable on contributions to United Nations Relief and Works Agency (UNRWA) for Palestine Refugees.
Faisal said Fidelity reversed its ban months later in response to a petition, with many other nations also resuming donations to UNRWA — including its US chapter — as of April 2024. But during that time, he said some Muslim investment funds were affected — simply by association.
Patron Capital Founder and Managing Director Keith Breslauer said while geopolitical uncertainty can make Shariah investments sometimes tricky to navigate, his view is that these investors are definitely not on pause and are still actively investing.
Keith’s past experience is that many Shariah investors seem to want specific assets, with a preference to buy a building or something similar. “Looking 10 years ago, it was easy to make money then by buying into real estate. Now real estate is a lot harder, there’s a lot of volatility.”
Consequently, Keith has seen a trend away from direct purchases as most investors are choosing to go into funds and he said Shariah investors are doing exactly the same. The preference for investing in funds instead is to better tap capabilities of “a good manager who can also present different ideas”.
Keith remained optimistic of there being a big amount of savings out in the world, looking to making decent returns. Among the biggest handling such Shariah fund flows are family offices or institutions in the Middle East.
Catering to such large investors — which include the Abu Dhabi Investment Authority, Qatar Investment Authority and Saudi Arabia’s Public Investment Fund — means the opportunities need to have a minimum US$2 billion-worth of asset value. “Most of such large investors would want to invest around 10%, with the typical entry threshold these days of about US$200 million.”
