Islamic Fund Report - Ernst & Young IFIR09 v1

Top 20 FREQUENT WORDS

islamic 164 asset 101 funds 95 mega 90 global 83 investment 82 management 68 ernst 60 business 58 finance 57 fund 54 source 54 risk 49 analysis 48 brands 48 clients 46 leaders 46 future 42 shaping 41 assets 40 investors 40

DOCUMENT KEY POINTS

ifir reflects the measure taking as they seek to strengthen their market positions and renew growth strategies against the backdrop of the ongoing fal notwithstanding the effects of the crisis in the international financial markets major opportunities continue to exist for isla probe how the shari ah compliant funds industry can catalyse the next phase of growth providing industry leaders with ne business strategies in a challenging global economic climate
our gratitude goes to leading audit and business advisory firm ernst young and their islamic financial services group led by considerable international talent and resources in leading the research project and in developing the insights contained in thi we hope that the content of this third annual edition of the ernst young islamic funds investments report will be useful i and will assist your organisation in its quest for success in this dynamic industry

hence the contents of this report in terms of the activities to be carrie consistent with shari a in all cases and the opinion of at least one shari a scholar should be taken before any fur suggestions made in the report
information has sources including published country industry and institutional information and primary sources in the form of in we are not expressing any assurance on the accuracy or completeness of the information obtained

shaping the future of the islamic finance industry since
competition and business models

coupled with a corre this has forced investors to reconsider their choice of islamic asset manager as well as asset ifir highlighted the phenomenal rate of growth experienced in the islamic asset manage landscape has changed significantly as the global economic crisis has taken hold

shaping the future of the islamic finance industry since
introduction mega brands

however growth has stalled from historical highs global islamic funds industry estimated aum us b assets under management aum number of islamic funds source eurekahedge zawya ernst young analysis mega brands
shaping the future of the islamic finance industry since

islamic asset management has been impacted by the global reces survive the current downturn participants will need to adapt macro asset economic classes and conditions products islamic asset key management key investor business segments risks competition business models mega brands
shaping the future of the islamic finance industry since

not been insulated from the competition downturn business � reduced oil revenues and models a drop in global trade flo have decreased economic output in the gcc and asia respectively mega brands
gcc and asia have not been immune to the global recession liq subsiding macro asset economic classes conditions products islamic asset � the global

consequently gcc government surpluses are expected to decrease global average crude oil price and current account balances of governments in us billion e e current account balance us b global average crude oil price u source global insight qwest investment management ernst young analysis mega brands
shaping the future of the islamic finance industry since

meanwhile countries in south east asia are experiencing a slowdow exports and domestic demand reducing economic output combined merchandise exports imports and nominal gdp in malaysia and ind us billion e e nominal gdp us b merchandise imports us b merchandise exports us source global insight datamonitor ernst young analysis mega brands
shaping the future of the islamic finance industry since

shaping the future of the islamic finance industry since
asset classes and products mega brands

asset classes have been adversely affected by the global recessi stability have become key investment criteria macro asset economic classes conditions products islamic asset
investor � assetbusiness real estate classes particularly equities andsegments risks have been adversely affected by the global recessi � asset classes that offer liquidity and low volatility h

geographic middle east and asset class equities concentration re islamic asset distribution funds size us million equity fixed income cash real estate and private equity commodities balanced other middle east global asia north emerging and africa america markets source eurekahedge zawya ernst young analysis note bubble size de mega brands
shaping the future of the islamic finance industry since

sukuk issuance has slowed as widening spreads are making returns global sukuk issuance islamic fixed income funds middle east rest of world top quartile average return us m e deals announced the dubai government recently issued a bond with cds spreads now approaching bps
for the first time we re expecting renegotiation of ter miss no than see a default banks will be prepared to negotiate

real estate funds have been affected by falling real estate prices global reit index islamic real estate f top quartile averag jan mar may jul sep nov jan mar may jul sep nov jan mar may jul sep nov jan mar we never invested in real estate
we knew it was a bubble and we were just waiting fo demand for low end housing will probably stay the same but typically developments are aimed at the high en pain has been keenly felt

the middle east and africa asia and global mandates account for th of all islamic funds target market of annually launched global islamic funds number of fu e source zawya eurekahedge ernst young analysis note the above analysis includes i mega brands
shaping the future of the islamic finance industry since

shaping the future of the islamic finance industry since
key investor segments mega brands

asset � asset allocation has economic changed to reflect new marke classes realities there has been a flight to conditions safety products islamic asset key management key investor business segments risks competition business models
the global recession has impacted investable wealth across inve resulted in a reallocation of assets � investors have seen their investable wealth declin a result of the global downturn

there are seven significant investor segments in islamic markets individual quasi institutional mass affluent awqaf and endowments individuals with liquid wealth of awqaf focus on long term real estate with sha us k to us k and a high and cash holdings with shari a takaful o propensity to invest in shari a compliance being a necessity
in re pr co investors to consu similar to the hnwi segment these shari a compliant they are individuals prefer shari a compliant investor products but it is not compulsory

individual quasi institutional mass affluent a growing segment that demands simple and liquid products market size liquid assets held by mass affluent individuals in us billion e f gcc asia not growth rate of
assumed for asia an source datamonitor global wealth model ernst young analysis liquid assets include onsh

shaping the future of the islamic finance industry since

individual quasi institutional hnwi and uhnwi segment seeking adequate returns and hassle free rede market size value of assets held by hnwi and uhnwi in us trillion
assumed for source capgemini and merrill lynch world wealth report ernst young analysis

individual quasi institutional hnwi and uhnwi segment has witnessed a sizeable decline in assets but grow market size esti us liquid assets held by hnwi and uhnwi in us billion esti mar � � e f gcc asia growth rate of
asia in source datamonitor global wealth model ernst young analysis liquid assets include all onshore asset mega brands

the king abdullah university of science and technology kaust endowment fund has an endowment fund of us billion considered to be the th largest endowment fund in the world

product equity asset � long term fixed income investments cash class gap altern source industry interviews ernst young analysis

shaping the future of the islamic finance industry since

shaping the future of the islamic finance industry since

� sophisticated structured product offerings and exposure to product equity international markets asset � products that can compete in terms of price returns scale and service cash class gap quality with best of breed conventional offerings alterna source industry interviews ernst young analysis

shaping the future of the islamic finance industry since

islamic asset management has a potential revenue pool of over shari a sensitive investable assets in the gcc and asia by investor segment in us b pot estimated cagr investable assets and shari a sensitive portion affluents hnwis and uhnwis awqaf and endowments takaful
pension funds swf total shari a sensitive assets source industry interviews data monitor ernst young analysis note total investable assets and shari a sensitive portion for investor segments are assumed using sources found in the investor segmentation and key mark industry interviews

shaping the future of the islamic finance industry since
competition and business models mega brands

asset appears is fragmented a shakeout economic classes likely conditions products � fund managers need to decide whether to focus o product development or distribution returns or sca islamic asset and in house or outsourced key management key investor business segments risks competition business models
unfavorable market conditions shifting investor preferences and competitive landscape could result in a shakeout of industry play � average fund sizes remain small increased redemptions have resulted in fund liquidations � the competitive landscape for global islamic fund management

fund sizes remain small with over having aum of us m or le number of funds by aum us million source zawya eurekahedge ernst young analysis mega brands
shaping the future of the islamic finance industry since

navis capital partners limited wafra international investment company al meezan investment gulf finance house management limited maakl mutual bhd cmh fund pacific mutual fund bhd management group injazat capital avigo capital bnp paribas unicorn investment bank bsc asset mana mimb investment partners bank berhad hwang dbs investment bank aljazira kuwait financial centre management berhad first investment alliance investment venture capital kuwait finance company k

adaptation will require a realignment of business models investment management key business model considerations n � increase product base to rib uti � focus o retain market share o rat st services � keep distribution in house ist � revise f or move towards a wider an es encoura fe � distribution strategy dd islamic participa investment nd ya takaful pr eg od fund industry uc industry ts support functions � consider cost reduction by moving back and middle office functions to shared service centers or off shore source ernst young analysis mega brands
shaping the future of the islamic finance industry since

a and position themselves as alpha seekers or asset gatherers to s structure investment management returns strategy and fees value alpha � active management seekers � strategy which seeks to create value and achieve alpha no man s land � in order to maintain � performance aum and scale are kept relatively small � asset � fees are higher and gatherers weighted towards performance scale � the average � management fee for an � asset managers must focus their strategy and active islamic equity subsequently tailor their value scale and price fund is
objectives � those that do not will be unable to distinguish themselves in a volatile market source ernst young analysis eurekahedge note average management fees are for th mega brands

shaping the future of the islamic finance industry since
key business risks mega brands

asset economic appetite and classes unclear valuations will most be the conditionsrisks in products pressing business islamic asset key management key investor business segments risks competition business models
key business risks for reflect an industry in flux and a mark volatile � the business risks landscape for islamic asset management has changed substantially since � the economic downturn a reduction

shaping the future of the islamic finance industry since

the global economic downturn has been felt across all financial inst islamic investment management industry has not been immune commentary and contributing factors the global economic downturn is seriously impacting the islamic investment management industry th � the crisis has battered the entire islamic asset management spectrum both those perceived to be the vi riskiest and the safest investment classes
wi fu fund closures are expected to be significant th pr � traditional asset classes such as real estate and equities have suffered heavily in the global crisis and ba some interviewees have predicted the closure of as many as percent of funds in the sector

investment managers are diversifying their product range to target new investors � investment managers are having to diversify their product range to meet the changing needs of their investors and to target new investors for market share retention
the prolonged reduction in risk appetite has resulted in a marke traditional asset classes commentary and contributing factors investors are changing their investment strategies � interviewees have noted a change in strategy leading to changes in traditional asset allocations

declining values of portfolios are causing reported net asset values performance measurements to decline commentary and contributing factors declining and difficult to price valuations are causing fluctuations in prices and net asset value va � liquidity is still an issue leading to difficulties in valuing portfolio holdings
w no to sa key considerations due diligence on potential investments should be thoroughly performed � in order to ensure accurate valuations investment managers will need to ensure that thorough due diligence is con source corporate interviews ernst young analysis mega brands

risk management will play a pivotal role in and must be int firm in order to assess risk at an enterprise level commentary and contributing factors risk management is being integrated across the firm � risk management is likely to be integrated across divisions and portfolios to create a comprehensive firm level profile
systemic risks are to be viewed in light of the current collapse in the financial system � firms exposures will be identified in the context of the global financial system with risks to the firm identified on a systemic level

the reputation of the funds industry has taken taking a beating recen investors to withdraw capital commentary and contributing factors the revision of expected returns has created an air of mistrust � shocks to investors have led to a lack of trust as products that have been marketed as safe have the proved to be riskier than expected
pla ma tru du key considerations with the industry in the spotlight investment managers need to be proactive � investment managers need to be proactively engaged in actively communicating with their clients to address any c source corporate interviews mega brands

global financial turbulence has left many investment managers business models commentary and contributing factors previously robust business models have failed to cope with extreme market events � interviewees have suggested that across the islamic investment management spectrum the business models used have nearly all proved to be redundant in the current market conditions

shaping the future of the islamic finance industry since
conclusions mega brands

shaping the future of the islamic finance industry since
appendix a domicile considerations mega brands

difference between accredited institutional public � which instruments will the fund invest in � are there indigenous service providers experienced in the asset class source ernst young analysis

shaping the future of the islamic finance industry since

there is no capital gains tax regime in malaysia at this time and therefore capital gains are not subject to tax

shaping the future of the islamic finance industry since

ernst young s islamic financial services group emeia sameer abdi bahrain salmaan jaffery saudi arabia ahmed taher qatar robert abboud kuwait daryoush pour uae najeeb rana united kingdom richard h
grainger rgrainger u luxembourg pierre weimerskirch malaysia abdul rauf rashid abdul rauf

the report s methodology and our interviews survey methodology business risks radar � our survey sought to identify key trends and business risks for the � the ernst young risk radar is a global islamic asset management industry through in depth present the top business risks in interviews with executives and industry observers
� investor appetite � compliance threats originate in p � competition corporate governance � business risks � financial threats stem from volati economy business risk ratings � strategic threats are related to cu � ernst young subject matter experts developed a list of islamic investors and asset management business risks and contributing factors

references and the project team sources ernst young s project team � bank negara malaysia annual takaful statistics � bloomberg bahrain office � business week sameer abdi salma � capgemini and merrill lynch world wealth report zahir rashid mark s � cia world fact book kamran akhtar saad q � company annual reports samir bhegani fahim � datamonitor global wealth model faisal hasan hala n � deutsche bank swfs and investment policies � eurekahedge for questions or comments please con � financial times � global business monitor international mark
ey dot com � global insight � ifis � malaysian central bank � merrill lynch � ministries of justice and islamic affairs foundation and awqaf � msci � national mutual fund association � oecd private pensions outlook � preqin � qwest investment management � standard poors � swf institute � zawya mega brands

the portfolio of mega brands represents the landmark industry conferences and our client players in the international financial markets
mega is the market leading business information firm focused on achieving business results for the global islam industry since

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DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\sukuk islamic

KeyWords

fund islam invest shariah equities asset manage stock index companies global marketability production return risk investor countries sharecropping busi financi

DOCUMENT REFERENCES

Number of Pages

82

Published Date

2009-05-28 14:11:52

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Islamic Fund Report - Ernst & Young IFIR09 v1

Contents

Top 20 FREQUENT WORDS

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DOCUMENT WORD ANALYSIS

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KeyWords

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