Global Islamic funds market witness 300 percent growth

January 28, 2022

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The Bahrain-based Council of Islamic Banks and Financial Institutions (CIBAFI) has stated that the global Islamic fund market has grown by more than 300% to nearly $200 billion in assets under management over the past decade.

Islamic assets under management (AuM) rose 13.7% in 2020 despite the COVID-19 pandemic, albeit at a slower pace compared to 35.1% in 2019, the report said.

Growth in fixed assets of Islamic funds showed signs of recovery last year, reaching $194.51 billion at the end of the third quarter, up 17.1% from the end of 2020. However, this sector is in its infancy compared to traditional funds. .

Islamic finance prohibits interest payments and pure cash speculation and can only be used to invest in Sharia-compliant assets or portfolios, has been gaining momentum in markets in Africa, the Middle East and Southeast Asia for several years. It is still a fragmented industry with uneven rules and regulations.

“With the growth of the Environment, Sustainability and Governance market, Islamic funds have huge growth potential and are expected to play a significant role in the Islamic Financial Services Industry (IFSI) in the coming years,” said Abdelilah Belatik in the report.

Saudi Arabia is the leading country with most managed funds in the Islamic fund market, followed by Iran and Malaysia, according to the report.

However, Malaysia has the most number of funds (401), followed by Indonesia (209) and Saudi Arabia (183).

CIBAFI reports that there are 1,508 Islamic funds worldwide, managed by 345 Islamic financial institutions in 29 countries.

“Overall, despite impressive growth in recent years, the global Islamic fund market is relatively underdeveloped and smaller than others,” the report notes.