Islamic Fund Management
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Figure 1: Building Blocks to Sustain the Long-Term Growth of Islamic Fund Management
Source: RAM
Pillar 1 – Legal, Regulatory, Supervision and Shariah Frameworks
The establishment of a robust regulatory framework and ongoing market supervision
engender trust in the markets, allowing greater transparency in product development,
approval processes and governance while ensuring the protection of investors’ interests. The
governing rules and regulations that are issued by a regulatory body set the tone on the
conduct of asset management companies (AMCs) or fund managers and facilitate the orderly
development of the Islamic fund management industry. Since licences are issued by the
authorities, misconduct or the provision of false information to the public will result in the
revocation/suspension of licences and/or imposition of fines.
Equally important is the development of a trusted Shariah framework to govern the operations
of the Islamic fund management industry within accepted Shariah parameters. The issuance of
guidelines on Shariah screening and purification processes provides greater clarity to
investors and other market participants as regards their business conduct.
Pillar 2 - Development of Institutional Funds
The development of a captive market for Shariah-compliant assets is key to building an
investor base for Islamic funds. Wealth preservation and capital appreciation start with