Malaysia’s RHB launches Hong Kong’s first Islamic fund

19 June 2014   Category: News, Asia, Global, Hong Kong, Malaysia   By Derek Au

Malaysia’s RHB Asset Management (RHBAM), which has AUM of over US$13.96 billion, has launched Hong Kong’s first Islamic investment fund, as the territory seeks to advance its credentials in Shariah-compliant financial products. 

The actively-managed RHB-OSK Islamic Regional Balanced Fund will invest between 40% and 60% of its net asset value (NAV) in equities that comply with Islamic financial principles, as well as non-equity Shariah-compliant assets such as sukuk (Islamic bonds), money market instruments and deposits.

The fund may also invest heavily in overseas securities within Asia-Pacific, including those in China, Hong Kong, India, Indonesia, Korea, Singapore, Japan and others, according to a statement from RHBAM.

Investors have to subscribe at least $1,000 for initial investment and can purchase additional units at a minimum of $100. It is open to investors of all religious beliefs.

“We believe there is significant appetite by investors interested in participating in Islamic investment products as an alternative to other traditional options. The fund is best suited to those investors seeking a diversified portfolio of Shariah-compliant investments that provides a regular income and capital growth in the medium to long term,” commented Ho Seng Yee, chief executive officer and regional head of retail distribution at RHBAM.

The firm added it plans to introduce two more Islamic funds in Hong Kong next year and is also eyeing the Chinese market, which is estimated to be home to between 30 million to 50 million Muslims.

The Islamic fund is the first product launched under a mutual agreement between the Hong Kong Securities and Futures Commission (SFC) and the Securities Commission Malaysia (SCM).

John Tsang, financial secretary of Hong Kong, spoke of the opportunities of developing Islamic finance in Hong Kong in 2008, but no significant progress had been made until recently.

The SFC and the SCM jointly organised a seminar on the development of Islamic funds in Hong Kong on June 17.

“Our robust infrastructure and world class reputation as well as first mover advantage in RMB finance and products, all combine to make Hong Kong an excellent platform to further develop Islamic finance products for sale to investors domestic and internationally," commented Alexa Lam, the SFC’s deputy chief executive officer and executive director, investment products, international and China. She added that the two regulatory bodies would work closely to develop Hong Kong’s Islamic finance platform.

According to a report by Thomson Reuters last year, global issuance of sukuk is expected to hit $229 billion this year, up from $211 billion in 2013.