CIMB-Principal Islamic launches Malaysia's first global sukuk fund under UCITS structure

CIMB-Principal Islamic Asset Management Sdn Bhd (CIMB-Principal Islamic) in a statement today said it will act as the investment manager and master distributor of the fund.

"The fund reaffirms CIMB-Principal's continuous support towards developing Malaysia as a hub for Islamic finance products at the global stage," it said.

The US dollar-denominated fund seeks to maximise total returns over the medium to long term through a combination of capital growth and income by investing primarily in a diversified portfolio of Shariah-compliant fixed income securities (sukuk) issued by government and government-related entities, corporates or supranational entities based mainly in the Middle East and Asia.

CIMB-Principal Islamic Chief Executive Officer Datin Seri Norashikin Mohd Kassim said the fund would appeal to investors looking for ethical investments with stable returns in major currencies, for example, US dollar, by tapping into the sukuk of leading issuers, predominantly sovereign and sovereign-related credits in the Middle East and Asia.

"We believe sukuk offers superior risk-adjusted returns and diversification benefits to investors due to the lower volatility and lower correlation to conventional equities and fixed income," she said.

Norashikin said CIMB-Principal Islamic expected strong demand for the Global Sukuk UCITS Fund given the current volatile equity markets and a shortage of good sukuk issuances in the market.

"The outlook for global sukuk issuances in 2016 will remain constructive due to strong underlying credit fundamentals and the need to access capital markets to close budget gaps," she said.

UCITS funds, governed by strict international regulations, provide an excellent platform for investors to access global investment opportunities efficiently.

Additionally, global investors could leverage on the company's investmentexpertise as the premier Shariah-compliant asset manager, said Norashikin.

The fund will be offered to investors for a minimum investment of US$1,000 and is ideal for those who seek a diversified portfolio and capital appreciation over the long term.

The fund has an initial offer price of US$10.00 per share while the Shariah adviser for the fund is CIMB Islamic Bank Bhd.