KUALA LUMPUR: CIMB-Principal Islamic Asset Management (Ireland) PLC said it has obtained approval from the Central Bank of Ireland to launch its Global Sukuk UCITS Fund, Malaysia’s first global sukuk fund under the undertakings for collective investment in transferable securities (UCITS) funds structure.
In a statement yesterday, CIMB-Principal Islamic Asset Management Sdn Bhd (CIMB-Principal Islamic) said it will act as the investment manager and master distributor of the fund, adding that the fund reaffirms CIMB-Principal Islamic’s continuous support towards developing Malaysia as a hub for Islamic finance products on the global stage.
According to the statement, the US dollar-denominated fund seeks to maximise total returns over the medium- to long-term through a combination of capital growth and income by investing primarily in a diversified portfolio of Syariah-compliant fixed-income securities (sukuk) issued by government and government-related entities, corporates or supranational entities, based mainly in the Middle East and Asia.
CIMB-Principal Islamic chief executive officer Datin Seri Norashikin Mohd Kassim said, “The fund will appeal to investors looking for ethical investments with stable returns in major currencies, for example, US dollar, by tapping into the sukuk of leading issuers, predominantly sovereign and sovereign-related credits in the Middle East and Asia.”
“We believe sukuk offers superior risk-adjusted returns and diversification benefits to investors due to the lower volatility and lower correlation to conventional equities and fixed income. We expect strong demand for the Global Sukuk UCITS Fund given the current volatile equity markets and a shortage of good sukuk issuances in the market,” she said.
“The outlook for global sukuk issuances in 2016 will remain constructive due to strong underlying credit fundamentals and the need to access capital markets to close budget gaps. UCITS funds, governed by strict international regulations, provide an excellent platform for investors to access global investment opportunities efficiently. Additionally, global investors can leverage on our investment expertise as the premier Syariah-compliant asset manager,” said Norashikin.
Historically, global sukuk has outperformed conventional emerging markets’ bonds during periods of market downturns. Global sukuk issuances have witnessed rapid growth over the years.
The total issuance from January 2001 to December 2015 was US$767.1 billion. Meanwhile, 2012 recorded the highest global sukuk issuance, amounting to US$137.6 billion.
In recent years, the UK, Hong Kong, South Africa and Luxembourg have also issued sukuk, creating a diversification of new issuances.
As at July 31, 2016, CIMB-Principal Islamic managed a total of US$608 million (RM2.52 billion) in global sukuk mandates.