Global Islamic funds market grows 300% in decade – report
DUBAI, Jan (Reuters) – The global Islamic funds market has grown by more than 300% over the last decade to nearly reach $200 billion in assets under management, the Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI) said on Wednesday.
Islamic assets under management (AuM) grew 13.7% in 2020 despite the COVID-19 pandemic, though that was slower than the 35.1% growth of 2019, it said in a report.
Islamic finance, which bans interest payments and pure monetary speculation and can only be used to invest in sharia-compliant assets or portfolios, has been on the rise for many years across markets in Africa, the Middle East and Southeast Asia. It remains a fragmented industry with uneven rules and regulations.
Saudi Arabia has the most assets under management in the Islamic funds market, followed by Iran and Malaysia, according to the report.
There are 1,508 Islamic funds globally, operated by 345 Islamic financial institutions in 29 countries, CIBAFI said.
Challenges to the sector include Islamic funds’ regulatory framework and adoption of regulatory standards, sharia governance, a lack of sharia-compliant investments, scalability and capital market development over the long term, the report said.
“Overall, despite showing impressive growth over the years, the global Islamic funds market is relatively immature and much smaller in size compared to its counterpart,” the report said.