JEDDAH — The National Commercial Bank (NCB) has launched the AlAhli Ma'moun Fund for International Stock Trade D' , a new Shariah-compliant fund offering opportunity to investors seeking to diversify their investment portfolios.
The minimum fee for participation in the fund is SR250,000 and there is no maximum limit. "The fund is fully compliant with Islamic principles and is a new investment opportunity because it opens doors for investors seeking to diversify their investment portfolios and use investment revenues in large global corporations that enjoy a strong and stable growth," explained Sami Abdo, investment services division head at the NCB. "Moreover, the fund protects the investor's capital," he said at a Press conference here last week. "The fund protects the investor's capital — 100 per cent of his investment value, in addition to participating with capital profits (if available) by investing in Shariah-compliant international stocks," he said. Ayman Bajsair, head of product development, and Saeed Mohammed Albatati, manager, investment product development and researches, investment services division, also attended the Press gathering. Abdo said that the fund would invest in international corporations that have an excellent track record of achievements and successes built on sound foundations with a wide range of products and services and rich consumer segments.
"The fund aims to protect the investor's capital whatever the market performance," he added. He said that the corporations that the fund selects to invest in will work towards increasing their growth over the two years, which is the life span of the fund. The investment would then become a cash flow for investors. The NCB is the first bank to develop and launch the investment fund service. Many of its investment funds have turned out to be the best performing ones in the world including Saudi Stock Trade Fund, which achieved an exceptional profit of 850 per cent during the past six years and was rated as the best performing stock fund in June 2006 by Standard and Poor's for investment fund services, the global leader in credit ratings and credit risk analysis. With Muslims accounting for 1.6 billion, or 25 per cent, of world population, demand for Islamic finance is booming. But only one Islamic bank in the world — Al-Rajhi Bank — has capital exceeding $500 million, and 10 others have more than $200 million.
According to Rifaat Ahmed Abdel Karim, secretary general of the Kuala Lumpur-based Islamic Financial Services Board (IFSB), Islamic banks must realise that remaining small will not help. They need to grow to be competitive in the market, for better economies of scale and to be able to take on big projects. IFSB sets self-regulatory standards for Islamic banking based upon Shariah laws, which ban investments that pay interest or that derive profit from alcohol, tobacco, pork, gambling or weapons. Islamic banking is largely concentrated in the Middle East and Southeast Asia but it is making inroads into Europe and the United States.
There are nearly 300 Islamic banks with combined assets of over $265 billion, but they account for only one per cent of global banking assets. According to one study deposits at Islamic banks are now estimated at some $202 billion and are growing at the rate of 20 per cent annually. The report called for further developing Islamic banking services and tools such as bonds, investment banking, asset management, private banking, risk management, project financing, Islamic accounting, Islamic life insurance, and bank guarantee to take the industry to greater heights.
The report forecast launch of more Islamic banks in the region in the coming years. Albaraka Banking Group (ABG) intends to increase the number of its branches to 250 within the next five years.