The growth of Shariah-compliant funds over the last decade is one of the many manifestations of the dynamic development in the Islamic finance sector. The rapid expansion in the number of managers offering Shariah-compliant investment vehicles across the world demonstrates the increasing diversity of the industry in terms of asset classes and geographies. Currently, Islamic funds across the world are estimated to manage assets of about US$70 billion while the number of funds is about 680.
To discuss the various unique aspects of this sector, it is important to develop an understanding of the basic characteristics of Islamic banking and wealth management. The issues which drive the capital allocations to Islamic finance are further applied to developing, managing and investing through Islamic funds. As such, it is prudent to first elaborate on the key characteristics of Islamic funds before analysing the key trends that are shaping the industry.
