Luxembourg moves to capture Islamic fund interest

A working group of the Luxembourg Funds Association (ALFI) has produced a collection of best practice guidelines on how to set up and service Islamic funds.

Germain Birgen of RBC Investor Services and chairman of the ALFI Middle Eastern sub-committee, said the initiative follows the growing level of assets under management in the sector (reaching $5bn), and ALFI’s aim to remain at the forefront of innovation for the funds industry.

Birgen said the guidelines are “not regulation, but an industry standard which has been created in order to achieve a consistency amongst service providers”.
ALFI created a dedicated working group for Islamic funds in 2008, following steady growth in the sector since the first launch in the 1990s.

One of the first tasks was to analyse whether its legal framework catered for setting up and servicing Islamic funds in Luxembourg, Birgen said. It found that all categories of funds and legal structures can comply with Sharia principles in order to set up Islamic funds.

He considers that with an increased focus on the sector globally, the outlook for Islamic funds is positive. He is confident that Luxembourg will continue to attract major fund managers to domicile their Sharia funds in Luxembourg and hopes to maintain, if not improve, Luxembourg’s position as one of the top five domiciles for Islamic Funds.

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