Embracing the Israel Securities Authority's Regulations for Sharia Investment Funds
We unpack how regulations are expanding opportunities for Sharia Compliant Investments in Israel and beyond.
The global landscape of Sharia and Islamic Funds is evolving rapidly, now constituting a significant portion of the investment funds industry. According to data from the General Council for Islamic Banks and Financial Institutions based in Bahrain, this sector has expanded by an impressive 300% over the last decade, culminating in approximately $200 billion in Assets under Management (“AuM”) by 2022. Despite encountering a temporary slowdown due to the COVID-19 pandemic, this sector continues to exhibit robust growth. Notably, this growth extends beyond traditional Muslim-majority nations, encompassing regions such as the UK, Europe, the USA, and India. These areas demonstrate a keen interest in ethical investments or have substantial Muslim populations.
Apex Israel have a track record of servicing over 500 funds and managing assets of $3 billion and warmly welcome the recent move by the Israel Securities Authority. This regulatory body has introduced guidelines pertaining to Halal, Islamic, and Sharia Investment funds that align with Sharia-based principles.
Shmuel Menahem, Israel Country Head, expressed his enthusiasm for this development, stating, "Given Apex Group's dominant position in the market, our support for numerous funds, and our substantial assets under management, we eagerly embrace the inclusion of these Sharia Compliant Funds in the investment landscape. This not only opens doors for Israeli citizens and businesses, but also extends the opportunity globally for individuals and entities to engage with Sharia Compliant Funds. These funds enable investment in the flourishing Israeli economy, including the dynamic Israeli Startup Nation."
However, the landscape of Sharia and Islamic Funds is far from homogeneous. The lack of ambiguous regulations, divergent rules, and inconsistency pervade this domain. Furthermore, there exists a shortage of Sharia-compliant investment opportunities, hindrances in scaling up such investments, and a dearth of high-value investment deals.
Naveed Yasir, Country Head of Dubai who oversees the Apex Group Sharia Funds Centre of Excellence in Dubai, servicing a USD 6 billion portfolio of 60 global and local Sharia funds (open ended, PE and real estate funds), highlighted our commitment to excellence. He emphasized that our cutting-edge fund administration technology, expertly trained Sharia Fund personnel, and adeptness in navigating intricate Sharia and Fund regulations are qualities that resonate well with our clientele. He further highlighted the significance of Israel's proactive stance in supporting these funds, suggesting that it will invigorate the landscape for traditional investors from regions including Malaysia, the UK, Europe, and the Gulf Cooperation Council (“GCC”). He pointed out that the surging interest in Environmental, Social, and Governance (“ESG”) investments indicates a notable intersection between ESG and Sharia investment philosophies, likely leading to increased AuM in this sector in the forthcoming years. As international attention turns to events like COP27 in Egypt and COP28 in the UAE, substantial interest from the GCC and beyond is anticipated for Israeli Sharia Funds.
In essence, our embrace of the Israel Securities Authority's regulations marks a significant stride towards enhancing Sharia-compliant investment opportunities. With a global financial climate displaying a growing affinity for ethical and Sharia-compliant investments, Israel's foray into this arena opens doors not only for its citizens, but for a diverse array of investors seeking both financial returns and ethical alignment. Our expertise converges with evolving market trends, and the prospect of a robust and innovative ecosystem for Sharia-compliant investments gains further momentum.
How can we help?
Our experienced teams in Israel and global locations can support Sharia funds with capital raise, fund and investor services, corporate services, banking, and custody solutions. We remain committed to providing the industry with cutting-edge solutions that meet the ever-evolving needs of the market. Our expertise in the areas of continuation funds, digital processes, and data management positions us well to support our clients as they navigate the challenges and opportunities of the investment landscape. We look forward to continuing to partner with our clients and to delivering the highest level of service and innovation in the industry.