Asset Management in Islamic Finance

Asset management involves both fund management and discretionary portfolio services consistent with the goals and plans of the individual clients. As there are now 100+ Shariah-compliant funds, the opportunities for high net worth investors to take advantage of asset management services have grown significantly. Private banking clients may have specialized needs, such as management of trusts, established for tax or inheritance factors. In addition to fund management, clients can now received services based on a wide-range of portfolio, ranging for stocks, Islamic sukuk securities, etc.
Parallel to Islamic financial institutions, conventional financial institutions with Islamic windows are now able to offer competitive and quality services based on their resources and experience. Of course, such conventional institutions employ their own Shariah supervisory boards to ensure compliance of their products and services with the Shariah. Investing with conventional financial institutions with Islamic windows has become increasingly popular because of their better capacity to manage risk through globally diversified portfolio accompanied by high level of liquidity. Now beyond single manager equity funds, there are also fund of funds to better deal with Islamic asset management. Despite the fact that Shariah-approved hedging techniques as part of fund risk management remains limited, stock options are gaining recognition as an acceptable vehicle as part of the tool kit of fund management.

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