Good Islamic investments primarily come in the form of offshore mutual funds. Unfortunately, good ones are few and far between. Many are improperly managed by untrained and unsupervised individuals. I won’t buy many of them for any of my clients. Who should? In the age of post-Enron, post-Worldcom, we don’t need to buy offshore investment assets that don’t meet the most stringent test for professionalism, transparency & ultimately for what I call “truthfulness.”Wednesday, May 30, 2007
Performance of Islamic Mutual Funds
Good Islamic investments primarily come in the form of offshore mutual funds. Unfortunately, good ones are few and far between. Many are improperly managed by untrained and unsupervised individuals. I won’t buy many of them for any of my clients. Who should? In the age of post-Enron, post-Worldcom, we don’t need to buy offshore investment assets that don’t meet the most stringent test for professionalism, transparency & ultimately for what I call “truthfulness.”
New Horizons for Islamic Securities: Emerging Trends in Sukuk Offerings
This Article seeks to demystify sukuk by providing an analysis of the nature and application of sukuk structuring techniques, with an emphasis on legal considerations, in the rapidly changing world of Islamic finance.2 It also attempts to explore emerging trends in the rapidly evolving marketplace for sukuk investments. In particular, this Article will evaluate both the underlying legal principles involved in innovative sukuk structures and the use of assets in non- Islamic jurisdictions to back securitizations represented by sukuk certificates. After providing a general explanation of the fundamentals of sukuk as an Islamic investment vehicle and an overview of the growing importance of sukuk in the marketplace, this Article will turn to a discussion of the primary legal challenges of utilizing assets to back sukuk offerings in non-Islamic jurisdictions. In addition, this Article will provide an analysis of key conflicts of law considerations posed by the “exportation” of sukuk products outside their traditional markets. The first ever sukuk offering involving US assets will be examined as a case study to provide additional insight into how asset-backed sukuk deals in non-Islamic jurisdictions must be carefully structured.The Taxation of Islamic Finance in Major Western Countries
For several decades, Islamic finance has been growing rapidly in the Muslim world, particularly in the Middle East and Malaysia. In view of the importance of the major western financial centres such as London, New York, Frankfurt and Tokyo, Islamic banks headquartered in Islamic countries find that they need to have operations in these western financial centres. More recently, as the Muslim populations of western countries have increased, they have a desire to access Islamic financial services themselves.Managing Financial Risk of Sukuk Structures
The objective of this research is to review the evolution of Sukuk markets, describe the Sukuk structures and analyze the various risks underlying the Islamic sovereign and corporate Sukuk structures. The paper compares the risk underlying 5 traditional fixed income instruments and those underlying the Sukuk structures. Interest rate swaps and other derivative instruments are utilized to manage the risk of the traditional fixed income instruments. These instruments are not available to Islamic asset managers. The paper therefore, aims to analyze the securitized structures of Sukuk and suggest Shari’ah compatible frameworks which can replicate the functions of interest rate swaps and derivatives in managing the risks of Sukuk.Friday, May 25, 2007
Sharia Marketing
The marketing world is progressing from rational market towards an emotional market and even to the extend of spiritual market. In rational marke, customers buy products and services with rational thoughts (such as function and price), while in an emotional market, customers use their emotional thoughts (such as personal taste, prestige, self image). A customer in spiritual market starts to consider values (such as right or wrong, halal or haram). Perhaps this trend is what drives the rapid development of the sharia (Islamic based business) market.Principles of Shari'ah Governing Islamic Investment Funds
The term ‘Islamic Investment Fund’ here means a joint pool wherein the investors contribute their surplus money for the purpose of its investment to earn halal profits in strict conformity with the precepts of Islamic Shari’ah. The subscribers of the Fund may receive a document certifying their subscription and entitling them to the pro-rata profits actually earned by the Fund.The Economics of Islamic Finance and Securitization
Islamic lending transactions are governed by the precepts of the shariah, which bans interest and stipulates that income must be derived as return from entrepreneurial investment. Since Islamic finance is predicated on asset backing and specific credit participation in identified business risk, structuring shariah-compliant securitization seems straightforward. This paper explains the fundamental legal principles of Islamic finance, which includes the presentation of a valuation model that helps distil the essential economic characteristics of shariah-compliant synthetication of conventional finance. In addition to a brief review of the current state of market development, the examination of pertinent legal and economic implications of shariah compliance on the configuration of securitization transactions informs a discussion of the most salient benefits and drawbacks of Islamic securitization.
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