Kuala Lumpur: CIMB-Principal Islamic Asset Management (Ireland) PLC has obtained approval from the Central Bank of Ireland to launch its Global Sukuk UCITS Fund (“Fund”), Malaysia's first global sukuk fund under the Undertakings for Collective Investment in Transferable Securities (“UCITS”) funds structure.
CIMB-Principal Islamic Asset Management Sdn. Bhd. (“CIMB-Principal Islamic”) will act as the investment manager and master distributor of the Fund. The Fund reaffirms CIMB-Principal Islamic’s continuous support towards developing Malaysia as a hub for Islamic Finance products at the global stage.
The USD-denominated Fund seeks to maximize total returns over the medium to long term through a combination of capital growth and income by investing primarily in a diversified portfolio of Shariah-compliant fixed income securities (Sukuk) issued by government and government-related entities, corporates or supranational entities, based mainly in the Middle East and Asia.
Datin Seri Norashikin Mohd Kassim, Chief Executive Officer of CIMB-Principal Islamic, said, “The Fund will appeal to investors looking for ethical investments with stable returns in major currencies, for example, US Dollar, by tapping into the sukuk of leading issuers, predominantly sovereign and sovereign-related credits in the Middle East and Asia. We believe sukuk offer superior risk-adjusted returns and diversification benefits to investors due to the lower volatility and lower correlation to conventional equities and fixed income. We expect strong demand for the Global Sukuk UCITS Fund given the current volatile equity markets and a shortage of good sukuk issuances in the market.”
“The outlook for global sukuk issuances in 2016 will remain constructive due to strong underlying credit fundamentals and the need to access capital markets to close budget gaps. UCITS funds, governed by strict international regulations, provide an excellent platform for investors to access global investment opportunities efficiently. Additionally, global investors can leverage on our investment expertise as the premier Shariah-compliant asset manager,” continued Norashikin.
The Fund will be offered to investors for a minimum investment of USD1,000 and is ideal for investors who seek a diversified portfolio and capital appreciation over the long term. The Fund has an initial offer price of USD10.00 per share. The Shariah adviser for the Fund is CIMB Islamic Bank Berhad. It provides a stable investment returns, lower volatility, and also portfolio diversification. The fund offers an attractive option for fixed income asset managers to hold investment exposure to Middle East and Asian economies.
Historically, global sukuk has outperformed conventional emerging markets’ bond during periods of market downturns. Global sukuk issuances have witnessed a rapid growth over the years. The total issuance from January 2001 to December 2015 was USD767,099 million[i]. 2012 recorded the highest global sukuk issuance, amounting to USD137,599 million[ii]. In recent years, the United Kingdom, Hong Kong, South Africa and Luxembourg have also issued sukuk, creating a diversification of new issuances.
Since the establishment of the new Islamic fund range in Ireland in 2011, CIMB-Principal Islamic has built up a good asset management track record, attracting both institutional and retail investors for UCITS funds, as well as for Shariah-compliant discretionary mandates. As at 31 July 2016, CIMB-Principal Islamic managed a total of USD608 million in global sukuk mandates.
[i] Islamic Finance Sukuk Database, Total Global Sukuk Issuances 2001 to 2015
[ii] Islamic Finance Sukuk Database, Total Global Sukuk Issuances 2001 to 2015