Islamic Fund Management
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Further to the abovementioned developments, the Islamic equity markets, including the
Islamic fund management market, have been charting significant progress. Key global trends
include the following:
 Increasing range and style of funds in various geographical regions, underpinned by
greater demand from conventional, Islamic and SRI.
 Expansion of asset classes, with sustainable sectors, e.g. renewable energy and green
finance, attracting the interest of fund managers.
 Growing role of takaful and pension funds in supporting the development of the Islamic
fund management market.
 More concerted efforts in the standardisation of Shariah screening criteria, to determine
the Shariah-compliance of stocks.
 Greater synergies between Islamic fund’s investment strategies and SRI finance with
increasing recognition of environmental, social and governance (ESG) principles and
sustainable development goals (SDGs) by asset managers, investors and regulators.
 Role of fintech in facilitating access to finance, thereby improving the efficiency of the
financial sector.
 Enhanced market infrastructure, e.g. in terms of a Shariah governance framework, with
a push towards the establishment of a higher Shariah authority in several
jurisdictions―to ensure strict Shariah compliance, promote standardisation and boost
credibility.
 Market infrastructure has also been developing through MRAs between jurisdictions for
cross-border marketing and the distribution of Islamic funds.
 Fund passporting is another developing area which can create a level playing field for
market participants while expanding the investor base. The promotion of UCITS in
various jurisdictions is an example. Another one is the introduction of ASEAN’s CIS
framework in August 2014, which enables Malaysian, Singaporean and Thai investors to
trade mutual funds if they meet certain standards (Thomson Reuters, 2015).
 International financial centres such as Luxembourg, the Cayman Islands, Jersey, and the
Labuan International Business and Financial Centre (Labuan IBFC) are playing
increasingly bigger roles vis-à-vis offering tax benefits to domicile Islamic funds.
2.1.6 Current Size and Market Share of Global Fund Management Industry
Global asset management is a multi-trillion dollar industry. Based on a PWC report (2017), the
industry is anticipated to expand further to the centre stage of finance in the coming years
compared to the banking and insurance sectors. Contributing factors include increased capital
regulations on banking institutions, increasing contributions to pension plans, urbanisation
and the growth of sovereign wealth funds (SWFs).
PWC (2017) estimates that the industry will augment from USD78.7 trillion of AuM in 2015 to
USD112 trillion in 2020, as shown i This is expected to be primarily driven by the
personal wealth of mass affluent clients and high net worth individuals (HNWIs), followed by
the wealth managed by pension funds and insurance companies. The penetration rate for
clients’ assets under management is projected to reach 39.4% in 2020, compared to 38.9% in
2015.
PWC (2017) also estimates that the growth will be faster in Latin America, Asia, Africa and the
Middle East relative to developed markets such as Europe and the US. Overall, Europe and the