The Growing In Islamic Funds

Shariah funds have been outperforming conventional funds lately which fast gaining appeal to investors in Malaysia.Today, the Islamic finance industry is constantly in the limelight due to its proven ability to weather the storm in times of global economic slump.Shariah funds offer some form of protection to investors from the impact of the financial crisis.

Islamic funds have been otperforming conventional funds via conventional indices.This is expected considering

• Islamic funds cannot have any exposure to conventional financial sector stock
• Investments in subprime loans are not permissible as they involve leveraged instruments
• Islamic law prohibits making money from money(example:interest) as wealth can only be generated through legitimate trade and investments in assets.

In Malaysia the dual system(Shariah & Conventional System) of law lies in its approach to synchronise both conventional and Shariah law abided by non-Muslim and Muslims respectively.This dynamic judical system has brought forth a comprehensive Islamic financial system that operates in parallel with the conventiona; system which endeavors to provide a united,prosperous and harmonious nation.
The establishment of Tabung Haji in 1969 and the first Islamic bank (Bank Islam Malaysia Berhad) in 1981 has been a natural progression in development which brought forth a distinct and vibrant Islamic financial market with a full range of Islamic banking,takaful and capital market products and services.

Growth Of Islamic Funds

Malaysia is an attractive investment destination due to a number of reasons:

• It has well executed policies
• A facilitative regulatory environment
• A growing number of intermediaries which continue to push the frontiers of product innovation
• A complete,matured and well established financial system.

Bank Negara Malaysia and Bursa Malaysia have also been instumental in providing facilitative infrastructure and necessary regulatory framework in promoting the growth of the Malaysian Islamic capital market.The framework introduced by Bursa Malaysia to allow Ringgit and foreign denominated sukuk or debt securities issued by local and international entities to be listed on the exchange will provide a valuable marketing tool for the Islamic fund managment industry.This framework will encourage potential issuers/investors from all over the world to raise or invest in Islamic debt securities.
Malaysia's commitment is to be an international Islamic financial hub which fully aware of huge global demand for Islamic wealth managment industry.The government has introduced numerous incentives and investment friendly policies to spur the growth of Islamic fund managment industry.
Malaysia have unique financial environment which allows comprehensive Islamic financial systems to operate in parallel with the conventional systems.Malaysia's image as a reputable Islamic nation and home to a multi-racial society are essential facets in supporting the initiatives to become an International Islamic Financial Centre.Growing in a multi cultural and multi religious environment where political and economic decisions are made to the best interest of the country and society.
Malaysia offers a consistent,reliable and robust Shariah compliance framework,which adds to its attraction as an investment destination.Malaysia has led in pioneering numerous products on the Islamic finance scene worldwide.Malaysia was the first to launch an Islamic banking system bringing forth asset worth RM90 billion or 10% from capital market coupled with takaful industry which accorded RM5 billion in asset.
Islamic financial system in Malaysia has evolved rapidly with the increased pace of liberalisation in the Islamic financial services which led to the increase of foreign presence and participation in Malaysia's domestic Islamic financial system.As a consequence,the diversity of players in the local financial system has grown with the debut of three Islamic banking giants namely Al-Rajhi Bank,Kuwait Finance House and Asian Finance Bank.