A unique book, Islamic Asset Management combines the expertise of banks, asset managers, Shari'a scholars, service and distribution partners to provide you with the latest, creative innovative solutions in the provision of Shari'a-compliant investment structures.
Whether you are advising retail, high net worth, corporate or sovereign investors, on equity investments, sukuk, real estate investments, takaful and alternative investment vehicles, this book provides a comprehensive, global examination of Islamic asset management issues with contributions from the UK, US, the Gulf and Malaysia.
Through 19 individual chapters, experts in Islamic finance and practitioners across the industry provide you with all you need to know about:
Shari'a-compliant investment guidelines
Screening criteria for Islamic equity funds
Private equity investment
Investing in real estate and leasing funds
Takaful and health insurance plans
Legal and regulatory issues, investor confidence and governance Contributors include BUPA, DIFC, Dow Jones Indexes, Ernst & Young, ICP Ltd, King & Spalding LLP, NCB, National Bank of Sharjah, Oasis, Shamil Bank, Vinson & Elkins LLP, and Wafra.
Published in association with Kuwait Finance House and National Commercial Bank.
Table of Contents
Foreword Dr Zeti Akhtar Aziz, Governor, Bank Negara Malaysia, Kuala Lumpur
Editor’s introduction Sohail Jaffer, CIO and Partner, FWU Group, Luxembourg
Part I: Shari’a-compliant investment guidelines
1 Islamic investment funds Trevor L. Norman, Volaw Trust & Corporate Services Limited, Jersey
Introduction Definition and asset classes Structures Investment selection Purification of earnings Trading issues Conclusions
2 Shari’a supervision of Islamic funds Shaykh Yusuf Talal DeLorenzo, Yasaar Limited, London
Introduction The need for Shari’asupervision Background to supervisory boards Organisation of Shari’asupervision Shari’a supervision as consumer advocacy Funds without supervision Shari’a supervisory functions Monitoring fees Internal processes Board interfacing Shari’a board compensation Conclusions
3 Screening criteria for Islamic equity funds Rodney Wilson, University of Durham, Institute for Middle Eastern and Islamic Studies, Durham
Introduction Principles and practices of Islamic equity investment Differences between equity investment and musharaka and mudaraba The advantages of fund management for Islamic equity investments Sector screens for Shari’a compliance Financial screening Lessons from the ethical investment industry Widening the remit for Shari’a screening
4 Islamic indexes: the DJIM framework Rushdi Siddiqui, Dow Jones Indexes, New York
Introduction Index construction Role in the capital markets Islamic indexes Islamic screens: the DJIM approach Impact of Islamic screens Performance Conclusion
Part II: Islamic investments
5 Restoring confidence to Islamic equity investors Andrew Broadley, NCB Investment Services, Jeddah
Introduction Anxiety factors Transparency and accountability Regulation Conclusion Contents
6 Latest developments in Islamic investments Nizar A. Alshubaily, Shamil Bank, Kingdom of Bahrain
7 Islamic fixed-income securities: sukuk Nathif J. Adam, National Bank of Sharjah, UAE Abdulkader Thomas, SHAPETM Financial Corp. and AJ IF.org, Virginia
Background Shari’a principles and perspectives relating to sukuk Sukuk implementation structures and parameters Recent government and corporate issues and market trends Potential of sukuk for fund management purposes The road ahead for sukuk Conclusion
8 Successful private equity investing: guiding principles Nick D. Lodge, intellectual capital partners limited, London
Introduction Private equity: asset class overview and comment Private equity and Shari’a Conclusion 9 Private equity: an Asian perspective Darawati Hussain, Commerce International Merchant Bankers Bhd (CIMB), Kuala Lumpur
Introduction Private equity defined Portfolio asset allocation strategy Meeting Islamic investors’ requirements Shari’a issues relating to investments CIMB Muamalat Fund 1 Case study: Big Tree Conclusion
10 Models for development of Shari’a-compliant private equity and venture capital funds J.C.F. Lufkin, Matrix Group, Manila, Singapore and Kuala Lumpur
Introduction Investee assessments Important design variables and common considerations The models Conclusion Appendix: specimen investment memorandum
11 Investing in real estate funds Khuram Hussein and Asif Iqbal, iHalal Financial Services, Dubai Michael Samuels, Kleinwort Benson, London
Introduction Property fund checklist issues Shari’acompliance Conclusion
12 Islamic leasing funds Robert W. Toan and Monir Barakat, Wafra Investment Advisory Group Inc., New York
Conventional and Islamic leasing contracts Structuring a US equipment leasing fund Taxation of cross-border ijarah transactions Credit enhancement in ijarah transactions Strategic ijarah investments in emerging economies
Part III: Takaful life and health plans
13 Role of development policies in strengthening the takaful industry James Hume, Dubai International Financial Centre (DIFC), Dubai
Introduction Industry challenges Conclusions
14 Islamic health insurance Wayne Close, British United Provident Association (BUPA), Jeddah William Essex, writer
Shari’a-compliant insurance Contractual issues Islamic insurance in practice Future prospects
Part IV: Legal and regulatory issues
15 Legal implications of structuring and offering Shari’a-compliant investment products Ayman H. Abdel-Khaleq, Vinson & Elkins LLP, Dubai
Introduction Structuring Shari’a-compliant investment funds Examples of Shari’a-compliant investment structures Legal frameworks for the offering of Islamic funds Conclusion
16 Structuring the Shari’a-compliant transaction involving non-compliant elements Michael J.T. McMillen, King & Spalding LLP, New York
Introduction A critical commonality A rahn-adl collateral security structure An istisna’a-ijarah construction and mini-perm finance structure The new French credit bail immobilier structure A residual interest sale structure in a South Korean securitisation Conclusion
17 Building investor confidence through better governance and transparency Sameer Abdi, Islamic Financial Services Group, Ernst & Young, Kingdom of Bahrain
Introduction The need for branding Developing a viable brand Corporate governance and financial transparency: tipping the selection scales Corporate governance: issues and leading practices Financial transparency: issues and leading practices Conclusions
Part V: Forming the future
18 The Islamic dinar and the Islamic Central Bank Khalid Yousaf, Dubai International Financial Centre (DIFC), Dubai
Introduction A new currency and central bank? Currency basket linkage The mechanics of reform Conclusion
19 Achieving sustainable growth in Islamic finance Adam Ismail Ebrahim, Oasis Group Holdings, Cape Town
Introduction Regulation and standardisation Benchmarks Transparency Solidifying the framework Conclusions
Sohail Jaffer is a managing director of Premium Select Lux SA, an asset management subsidiary of the FWU Group. The company is based in Luxembourg and specialises in multi-manager funds. He is also a partner and CIO within the FWU Group, an independent financial services group headquartered in Munich. The group's main activities include asset management, life insurance and pension plans.
From July 1984 until September 1988 he was an audit partner with Price Waterhouse in Africa, and is a UK qualified accountant (FCCA).
From January 1989 until May 1998 Sohail was vice president of Citibank London. He was with the Financial Institutions Group until 1996, where his international business and product development activities included tailored principal-protected managed futures, commodities, hedge funds and equity derivative-linked investments for fund distributors in Europe and Japan. He managed a team focused on structuring customised principal-protected multi-strategy hedge funds.
He later joined Citibank's Alternative Investment Strategies Group, which formed part of Citibank Global Asset Management. There he was a director, and his responsibilities included business development and the distribution of multi-strategy hedge funds and collateralised high yield debt (CDO) funds to institutional investors and financial intermediaries in Europe and the Middle East . He was also a member of Citi's hedge funds policy and strategy committee, which was responsible for the fiduciary oversight of selected hedge fund managers.
From June 1998 until June 1999 Sohail was senior vice president within the International Mutual Funds Group of Scudder, Stevens and Clark Ltd, London, and was responsible for international product development in Europe and Japan. He is currently a council member of the Alternative Investment Management Association (AIMA) and chairman of the Middle East chapter. He also served as chairman of AIMA for two consecutive terms for the period 1997 to 2000.
He has published extensively on alternative investments, including editing Alternative Investment Strategies and Funds of Hedge Funds for Professional Investors and Managers, and contributing chapters to Evaluating and Implementing Hedge Fund Strategies (second and third editions) and The New Generation of Risk Management for Hedge Funds and Private Equity Investments, all published by Euromoney Books.