Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
ôWe have made a commitment to global Sharia investing,ö says Kuala Lumpur-based chief executive of ING Funds Steve Ong. ôWe already hired a head of global Islamic fund management here, who will start in March.ö
Ong declined to identify the new hire, but says he expects to have an initial headcount of up to three investment professionals dedicated to Islamic fund management. The newly hired head of the still-to-be-formed team will report to Mark Wang, chief investment officer at ING Insurance in Malaysia.
ING Funds and ING Insurance are in the process of consolidating their investment teams in Malaysia. The consolidated team will be headed by Wang, who moved to Kuala Lumpur last month from ING Investment Management in Hong Kong, where he was head of Hong Kong and China portfolios.
At present, ING Funds manages around $300 million in offshore and onshore Sharia-compliant funds. Because ING Funds is considered a local company, it has no restrictions in investing overseas. ING FundsÆ holding company, IFB Management Holdings, is a subsidiary of ING Management Holdings (Malaysia).
Ong expects the bulk of the demand to come from high-net-worth individuals and institutional clients overseas. ôIf an investor based in Singapore wants to invest in our Sharia product or wants to give us a customised mandate, we will be ready for that,ö he says.
Malaysia is positioning itself as a global Islamic finance hub, and has recently offered incentives such as tax breaks and the access to seed money to foreign fund-management companies to set up Islamic fund-management operations in the country.
Sharia principles generally preclude investment in businesses such as conventional financial services, alcohol, pork-related products, gambling, leisure and entertainment. Sharia principles also preclude interest-bearing investments and investments in companies with unacceptable levels of debt.
Ong argues ING Funds, having been present in Malaysia since 2005, would have an advantage over foreign companies that have yet to set up shop on the ground, citing the companyÆs combination of local knowledge and global standards. Its funds, some of which were launched as far back as 2005, would also meet requirements of institutional investors that tend to look at performance data and track records, he adds.
The company will rely on consultants for advice on Sharia compliance. The Islamic Banking and Finance Institute of Malaysia is its local Sharia advisor.
One of ING FundsÆ closet rivals, Prudential Fund Management, a unit of the UK's Prudential Asset Management, has already established Malaysia as its worldwide hub for all of Islamic investments. PFMB manages over $242 million in both domestic and offshore Sharia-compliant funds.
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