RHB Asset Management, the investment arm of Malaysia's fourth-largest bank RHB Capital, plans to launch a series of Islamic funds across Asia in the next year to take advantage of growing interest in sharia-compliant investments.
Malaysia's fund managers have long been domestically focused, but are being encouraged to build a wider footprint under the country's strategy to internationalise its capital markets.
RHB, which had $13.96 billion in assets under management as of April, aims to source a third of assets from overseas by 2018 against 12 percent today, said Ho Seng Yee, chief executive of retail distribution at RHB Asset Management.
Its latest Islamic fund, launched in Hong Kong on Tuesday, is part of this push, with more launches in the pipeline.
"We would like to launch two more Islamic funds in the Hong Kong market next year. Similarly we are planning to have Islamic funds launched in Singapore and Indonesia," Ho said in an interview. "It will not be later than the first quarter of next year."
Islamic fund managers screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling, in much the same way as socially responsible funds. So RHB hopes its sharia-compliant funds will attract some non-Muslim as well as Muslim investors.
RHB's latest fund, its 17th Islamic fund overall, will invest in both equities and sukuk (Islamic bonds), and is expected to grow to as much as $80 million in the next 12 months.
The fund's mandate will allow it to buy into Hong Kong's planned debut sukuk issue, which is expected to help raise awareness of the industry among Hong Kong investors. The Hong Kong government plans to issue between $500 million and $1 billion worth of Islamic bonds "after the summer holidays," a spokesperson for its central bank told Reuters earlier this year.
"Hong Kong investors are not familiar with Islamic funds and there are challenges, that's why we have planned and committed to do a lot of education," said Ho.
Malaysia is one of the largest markets for Islamic funds and more asset managers are gradually joining it. Last October, Malaysia's Malayan Banking, the country's largest lender, launched an Islamic asset management unit, while Britain's Threadneedle Investments set up in Malaysia a month earlier with plans to launch Islamic funds.
Malaysia had 19 Islamic fund managers with a combined 97.5 billion ringgit ($30.3 billion) in assets under management at the end of 2013, data from the Securities Commission showed.
