Islamic investment funds have, for a long time, been very domestic-centric. This issue was highlighted by Noripah Kamso, CEO of CIMB-Principal Islamic (CIMB-Principal) Asset Management, at the 2011 IFN Issuers & Investors Asia Forum last year. She also pointed out that there were ongoing efforts to encourage asset managers to internationalize and exhibit track records and capabilities by using global platforms such as Luxembourg and Dublin.
CIMB-Principal Islamic certainly ‘walked the walk’ when it launched its new platform last week. It became the first Malaysia-based international Islamic funds platform to be domiciled in Ireland.
CIMB-Principal Islamic Asset Management (Ireland) will act as an investment manager of the Islamic Undertakings for Collective Investment in Transferable Securities (UCITS) funds. Three new UCITS compliant Islamic funds are slated to be launched this year.
The funds launched will eventually be registered and distributed in seven jurisdictions: namely the UK, Switzerland, Germany, Saudi Arabia, Bahrain, the UAE and Singapore. CIMB-Principal Islamic anticipates showcasing its track record to a broader investor base that would also include those in the conventional space.
Noripah likens the process to a display in a shop window, where institutional and retail investors can track such a fund on international investment research providers. “When these investors become keen to invest, an internationally visible track record as such, will be the key determinant in appointing CIMB-Principal Islamic to manage their discretionary mandates as well,” she says.
UCITS, which began as a platform designed for European regulations in order to distribute funds across the European Union (EU), is slowly receiving global acceptance. The seven jurisdictions mentioned above are all full acceptance of this platform. According to a recent report, a total of 5,267 UCITS funds were distributed in Asia in 2009.
In terms of UCITS compliant funds, Ireland is considered the fastest growing major cross-border domicile. A majority of Islamic funds are looking towards complying with the UCITS platform due to the ease in registering for worldwide distribution besides being well known. Ireland UCITS funds are distributed in over 70 countries worldwide.
Ireland has adopted the UCITS IV platform since the 1st July 2011, with equity being the main traditional asset class to be promoted and sold. Luxembourg was the first country in the EU to introduce UCITS IV.
UCITS IV, an EU initiative under the Lamfalussy Process, was adopted from the European Parliament and the Council of the EU directive on the 22nd June 2009. UCITS is said to be conducive for fund managers in terms of its investor protection, transparency and disclosure requirements.
CIMB Principal Islamic is also taking a step further by obtaining the assistance of AllFunds Bank to distribute the three new funds. AllFunds Bank, part of the Banco Santander Group, is based in Madrid and offers distribution services to 400 fund managers and over 20,000 funds, and has an extensive network of more than 300 distributors in more than 16 countries.
Monem A Salam spoke of this distribution method of using offshore platforms of existing mutual fund distribution networks in his presentation during the 2011 IFN Issuers & Investors Asia Forum.
Monem explained that using this channel, a fund manager can use the existing third party structure. Any client can purchase the funds and the clearing is done through a centralized source. This, he explained, removes issues with the regulatory authorities, making it almost like an unsolicited transaction.
Theory has finally been put into practice as CIMB Principal Islamic paves the way for other Islamic asset management companies towards international recognition. Quoting Noripah: “You need to be a premier player to play in the premier league,” and this is precisely what the asset management house has achieved. — RW