SINGAPORE - Investment products that adhere to syariah or Islamic principles are slowly growing in popularity in Singapore.
Franklin Templeton has launched another three syariah-compliant funds, as the asset manager recognises the growth of Islamic finance.
The three funds are the Franklin Templeton Global Sukuk Fund, Templeton Shariah Global Equity Fund and Templeton Shariah Asian Growth Fund, and will be made available to retail investors.
A syariah-compliant product is one that operates in accordance with the religious beliefs of Islam. For example, syariah-compliant funds are not allowed to invest in businesses associated with activities barred by Islam, such as gambling or alcohol.
Conventional financial services are also excluded as they go against the religion's ban on interest.
To ensure compliance with syariah guidelines, Franklin Templeton scrutinises the business activities of every company that it picks at a granular level, and the three new funds have been independently reviewed and endorsed by the Amanie International Shariah Supervisory Board.
The Global Sukuk Fund focuses on fixed and floating rate syariah-compliant securities issued by government, government-related entities and corporates. Sukuk means Islamic bond.
For those who prefer equity investments, the Templeton Shariah Global Equity Fund will invest in the most undervalued opportunities globally.
The Templeton Shariah Asian Growth Fund will invest primarily in syariah-compliant equity and equity-related securities listed in the Asia region, excluding Australia, New Zealand and Japan.
Dr Mark Mobius, executive chairman of Templeton Emerging Markets Group, who will manage the Templeton Shariah Asian Growth Fund, said: "Syariah-compliant strategies are an important and growing market in many parts of the developing world, and Templeton is pleased to bring its emerging markets expertise to bear on this new offering for syariah investors globally.
Singapore's market for syariah-compliant funds is not deep, with about 15 on the market, including the DWS Noor Precious Metals Securities Fund that is managed by Deutsche Asset Management, and the DBS Mendaki Global Fund.
HSBC Insurance also offers investment-linked plans (ILPs) that are invested in syariah-compliant funds. However, HSBC's ILP products and platforms are non-syariah-compliant.
Mr Wong Sui Jau, general manager of Fundsupermart.com, said that the market for syariah-compliant funds may still be considered a niche, and investors still do not see the funds as mainstream products.
"The bulk of the investors interested in such funds are still Muslim, because it is at the end of the day, compliant with Islamic law. It is slightly different from having a fund that claims to invest in socially responsible businesses," he explained.
However, Mr Wong added that there are still a few non-Muslim investors who have inquired about syariah-compliant funds.
Similarly, Aberdeen Asset Management Asia senior investment manager Christopher Wong said that most Singaporean investors still lack the awareness of such funds.
Aberdeen recently launched some syariah-compliant funds in Malaysia, but it does not sell such funds in Singapore.
"I don't think there is much demand for syariah-compliant funds at the moment, so it is hard to find a compelling investor base here to support the development of Islamic fund management in Singapore," he added.
(Asia One News / 09 April 2013)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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