The new unit will sell Shar’iah-compliant funds to investors across the Asia-Pacific through ING Investment Management’s 13 offices in the region.
Key target markets for the new unit include China, Dubai and Hong Kong.
“We are looking to export [Shar’iah-compliant funds] as the Malaysian market is not really big,” says ING Funds chief executive officer Steve Ong. “This is the positioning that we want because we would like to manufacture it for ING Asia Pacific, Europe and America.”
As of April 2008, Islamic banking assets in Malaysia totalled $62 billion, or 15.4% of total banking assets, according to Moody’s Investors Service. ING Funds’ existing Shar’iah-compliant asset portfolio is worth M$1.56 billion ($449 million).
The launch of ING Funds' new Islamic finance unit aimed at global markets is in line with the Malaysian government’s goal of becoming a global Islamic finance hub. In its 2009 budget, released in August, Malaysian prime minister Abdullah Ahmad Badawi announced a three-year tax holiday on fees and profits for Malaysia-based foreign currency-denominated sukuks sold overseas.
The global Islamic finance market has posted strong growth in recent years. According to Standard & Poor’s, the market has grown from $500 million worth of global sukuks – Islamic securities – in 2001 to $60 billion in 2007. Also in 2007 there was approximately $500 billion in Shari’ah-compliant assets worldwide.
Asset funds sold by ING Funds’ new Shar’iah-compliant funds unit will be in line with Malaysia’s state Shar’iah laws.
In addition to the new global Islamic funds unit, ING Funds also launched a new Shar’iah-compliant Annual Income Climate Structure Fund on Wednesday. The Malaysia-based Australian dollar-denominated fund offers 5% annual income distribution over three years, potential capital upside returns at maturity and 100% preservation of capital. The fund will track the Citi Climate Change Opportunities Index and deliver capital returns if the index outperforms other major global market indices, including the S&P500 and the Nikkei225.
