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CIMB-Principal launches Dubin-domiciled Sukuk fund

10 January 2017

Fund invests in Sukuk of sovereigns in the Middle East and Asia

Read more: Sukuk Malasia Islamic finance UCITS

A Dublin-domiciled fund investing in Islamic bonds, known as Sukuk, launched this week.

The vehicle, part of a joint venture between Malaysian asset manager CIMB and Principal Global Investors, is UCITs compliant – meaning it can be sold to any investor within the EU.

Both CIMB and Principal won approval for the launch last September from the Central Bank of Ireland.

The fund mainly invests in Sukuk of sovereign and sovereign-related entities in the Middle East and Asia.

"Historically, global Sukuk has outperformed conventional emerging markets’ bonds, particularly during periods of market downturns," said Datin Seri Norashikin Mohd Kassim, chief executive of CIMB-Principle Islamic Asset Management.

"We expect strong demand for the Global Sukuk UCITS Fund given the volatile equity markets and the ongoing quest for yield."

Aside from Ireland, Hong Kong, South Africa and Luxembourg have also issued Sukuk in recent years.

2012 saw the highest global Sukuk issuance, amounting to $137bn. Issuance has slowed more recently and totaled $77.1bn in 2016

The deceleration in growth is largely due to challenging economic conditions in emerging markets and the Gulf Cooperation Council (GCC) tapping conventional liquidity from international investors.

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