Waking up to an investor-driven world
Luxembourg is being promoted aggressively by the Government as a European hub for Islamic funds. The Grand Duchy does not need to bring in new legislation, since the existing legal framework allows for the creation shariah compliant funds. These are the conclusions of the fourth edition of the Ernst & Young Islamic Funds and Investments Report 2010. 2009 saw signs of recovery in global financial markets, but there is cause for concern for the Islamic funds industry.
According to Ernst & Young, Islamic asset managers must respond to an investor-driven world in order to sustain themselves in the long run. The company has identified some key points for their attention:
- achieve scale to ensure long term sustainability. Over 55% of Islamic fund managers currently manage less than US$ 50 million each, which is unsustainable in the medium term;
- diversify into new asset classes to improve performance and better match investor needs;
- adopt flexible business models;
- regain investor confidence through increased transparency, frequent investor communication and proactive risk management. CW
Ernst & Young Report: