SYDNEY - Eyeing the chance of getting a share of the booming Islamic finance industry, an Australian firm is planning to launch a Shari`ah-compliant fund to enable Muslims to save for retirement.
We see significant, pent-up demand, Talal Yassine, the managing director of the Australian fund manager Crescent Wealth, told Reuters.
Speaking earlier this week, Yassine said the first Islamic pension fund would be launched by December which will allocate between 15% to 30% of it in property.
He added that Crescent Wealth hoped to build the fund to between $4bil and $6bil in five years.
The fund will also allocate money to Australian and international equities and cash management products.
Yassine said Crescent planned to invest in property assets on Australia's east coast as well as in real estate investment trusts.
Steady cashflows from property investments are attractive to a lot of investors especially in the shari`ah space, he said.
The pension fund will initially target domestic investors but will be open to international ones.
Yassine said his fund could appeal to conservative non-Muslim investors.
Muslims, who have been in Australia for more than 200 years, make up 1.7 percent of its 20-million population.
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
The Shari`ah-compliant system is now being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry.
Starting almost three decades ago, the Islamic banking industry has made substantial growth and attracted the attention of investors and bankers across the world.
A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.
Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.