CIMB-Principal launches first sukuk Ucits fund

Added 11th January 2017

The Irish unit of Malaysia-headquartered CIMB-Principal Islamic Asset Management has launched its first global sukuk Ucits fund.

CIMB-Principal launches first sukuk Ucits fund

The dollar-denominated fund is based on a diversified portfolio of sukuks issued by government and government-related entities, corporates or supranational entities mainly based in the Middle East and Asia.

Islamic bonds

Sukuks are Islamic bonds, structured in a way to generate returns to investors without infringing Islamic law, which prohibits interest and investments in gambling, alcohol and pure monetary speculation. 

A sukuk investor has a common share in the ownership of the assets linked to the investment although this does not represent a debt owed to the issuer of the bond.

“The fund seeks to maximise total returns over the medium- to long-term through a combination of capital growth and income,” said CIMB-Principal in statement on Monday.

The Shariah-compliant vehicle, which is managed by the asset manager’s team in Malaysia, aimed at investors looking for ethical investments with stable returns in major currencies, it added.

Datin Seri Norashikin Mohd Kassim, chief executive of CIMB-Principal Islamic Asset Management, said: “Sukuk funds offer stable investment returns, opportunistic alpha and diversification benefits to investors due to the lower volatility and lower correlation to conventional equities and fixed income.

Kassim added that historically, global sukuks have outperformed conventional emerging markets’ bonds, particularly during periods of market downturns.

“We expect strong demand for the Global Sukuk Ucits Fund, given the volatile equity markets and the ongoing quest for yield,” he said.

Nick Lyster, global head of wealth advisory services at Principal Global Investors, said: “Global sukuk issuances have witnessed a rapid growth and we have seen increased interest from European investors in sukuk funds over the past few years and now, these investors can access a global sukuk fund with a diversified core portfolio of investment grade dollar-denominated securities.” 

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