DUBAI, Sept 26 Assets held by global Islamic
funds jumped 7.6 percent in 2010 to $58 billion, reflecting new
money inflows and strength in fixed income, commodities and
other alternative investments, Ernst & Young said on Monday.
This compares with global Islamic funds' assets of $53.9
billion in 2009 and $51.4 billion in 2008.
But this rate of growth may be difficult to repeat this year
as global uncertainties including the sovereign debt crisis in
Europe and the likelihood of a double-dip recession in the
United States weigh on asset managers into 2012, according to
Ernst & Young's latest report on the industry, published
"The global economic scenario, investors' risk aversion and
the aftermath of the Arab Spring are the top three risks for
Islamic fund managers," Ashar Nazim, Middle East and North
Africa head of Islamic Finance Services at Ernst & Young, said
in a statement.
There are 800 global Islamic funds, making up 5.6 percent of
the $1 trillion Islamic finance industry. But 70 percent of
funds continue to struggle to reach the estimated break-even
mark of $100 million, based on average management fees.
Consolidation in the industry continues, with 23 new Islamic
funds launched in 2010, offset by 46 liquidated funds.
Twenty-three funds were liquidated in 2009.
"The big will get bigger as the going gets tougher to win
investors' trust," Nazim said.
Funds continue to struggle with a lack of quality
sharia-compliant assets and products to invest in as well as an
over-dependence on institutional funds, rather than retail funds
that could draw affluent consumers.
Retail funds currently make up only 33 percent of global
Islamic funds. But liquid wealth among sharia-sensitive
investors in the Gulf is expected to add more than $70 billion
to Islamic funds by 2013.
(Reporting by Shaheen Pasha. Editing by Jane Merriman)