Over the last ten years Shariah compliant funds have seen significant growth, both in terms of the number of funds as well as assets under management (AUM). Rapid developments in the Islamic finance industry, have led to an increasing number of Shariah compliant funds employing different strategies and investing across new asset classes, representing the progress and advances made in the Islamic finance sector.
As of 2011 the total number of Shariah-compliant investment vehicles is estimated to be 625, with assets standing just over US$77 billion. The Islamic fund sector underwent strong growth in 2007 witnessed by the launch of 180 funds, though there has been a much slower rate of growth since then.
Islamic funds mostly invest in asset-backed securities and do not apply leverage, therefore limiting performance-based losses. Additionally, existing funds have further consolidated their positions in 2009 and 2010. As at end-July 2011, the Eurekahedge Islamic Funds Index was up 38.9% since February 2009.
New launches in 2009 to 2011 represent increasing diversity in the industry in terms of asset classes and industry segments as well as geographies and investors. The sector has adjusted to the changed landscape post-financial crisis and has attracted attention from various quarters including western banks and investors.
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