Southeast Asia's sharia investment industry in shrank last year in line with the trend globally, according to AsianInvestor data, but there area solid reasons to believe steady growth will resume.

The 20 largest managers of Islamic funds in Southeast Asia saw an 8% drop in sharia assets under management to $26.2 billion last year, a smaller decline than the 12.2% fall to $84 billion globally.*

AsianInvestor compiled this data* as part of its annual project to identify the 50 largest managers of Islamic assets, with the Middle East and Southeast Asia the most important regions in terms of AUM. Last week we published the global figures and a feature providing background on the segment globally.

The drop in Southeast Asia was largely driven by equity assets, which declined 11% to $13.3 billion, while sukuk/money-market assets fell 4% to $11.7 billion. Alternative investments form a far smaller proportion of the sharia universe in the region that they do in, for instance, the Middle East.

Most fund houses in Southeast Asia saw falls in their sharia AUM, including the two biggest Malaysian players, Public Mutual and CIMB Islamic. However, there were a few notable positive growth stories, such as Maybank Asset Management and Hong Leong Asset Management.

It’s important to bear in mind that the figures in our list are expressed in dollars. The numbers posted by Malaysian asset managers were therefore negatively affected by the 20% decline in the ringgit against the dollar last year.

Meanwhile, there are several developments and factors working in favour of Islamic investing in Malaysia and the wider region. These include high-level moves to boost awareness and usage of these strategies.

Malaysia’s largest state retirement fund, the Employees Provident Fund, will roll out its plan to ringfence RM100 billion ($24.7 billion) to RM120 billion of its RM675 billion portfolio as fully sharia-compliant. From 2017, scheme members will be able to choose to have their pension assets managed on a purely sharia basis. 

Moreover, Malaysia’s RM120 billion civil service retirement fund, KWAP, is formulating similar plans, and more pension plans in the country are expected to follow.

There are also promising signs for Islamic investing in Indonesia and Brunei, said Akmal Hassan, managing director at AIIMAN, Affin Hwang’s Islamic business. Indonesian regulators amended regulations in January to allow sharia funds to invest up to 100% of their portfolios in foreign assets (the previous limit was 50%). Fund houses, including Aberdeen, BNP Paribas and Schroders, are now set to launch sharia equity funds with a global focus.

Meanwhile, Brunei introduced sharia investment law in 2014, and the Sultan is seeking to encourage sharia practices.

Of course, the building out of staffing infrastructure to support faster development of Islamic asset management will take time. There are still relatively few people working in asset management in Southeast Asia who are dedicated to Islamic investing, despite the need for at least one sharia specialist in each area of the organisation, from the front- to the back-office.  

The figures were compiled by Bernice Cornforth. The full feature appears in the latest (March 2016) issue of AsianInvestor.

Southeast Asia's top 20 managers of sharia assets by total AUM
2015 2014 Company Geography Total AUM
($ million)
Total
2014
%
change
1 1 Public Mutual Malaysia 7,193.7 8,027.1 -10.4%
2 2 CIMB Islamic Malaysia 4,747.4 6,001.64 -20.9%
3 3 Asian Islamic
Investment Management (AIIMAN)
Malaysia 2,118.3 2,155.6 -1.7%
4 5 Maybank Asset
Management
Malaysia 2,040.8 1,810.2 +12.7%
5 4 AmInvest Malaysia 1,717.0 1,896.0 -9.4%
6 9 Franklin Templeton
Investments
US/
Malaysia
1,593.0 1,236.0 +28.9%
7 6 BNP Paribas
Investment Partners
France/
Malaysia
1,524.6 1,586.9 -3.9%
8 8 Eastspring Investments Singapore 1,346.0 1,334.0 +0.9%
9 7 RHB Asset Management Malaysia 1,060.5 1,562.4 -32.1%
10 10 Amundi  France/
Singapore
1,060.0 1,063.0 -0.3%
11 11 Nomura Asset
Management
Japan/Malaysia 731.0 732.0 -0.1%
12 12 Amanah Mutual Malaysia 183.7 206.1 -10.9%
13 15 Hong Leong Asset
Management
Malaysia 169.0 102.5 +64.9%
14 13 Mandiri Investasi Indonesia 163.4 193.8 -15.7%
15 14 Pacific Mutual Fund Malaysia 133.0 155.0 -14.2%
16 17 Kenanga Investors Malaysia 86.2 81.3 +6.0%
17 16 Trimegah Asset
Management
Indonesia 73.7 91.0 -19.0%
18 20 PMB Investment Malaysia 53.6 49.6 +8.0%
19 18 Samuel Asset Manajemen Indonesia 50.2 75.4 -33.4%
20 19 TA Investment
Management
Malaysia 48.8 67.0 -27.3%
      TOTAL 26093.4 28426.6 -2.6%
      Y-o-Y growth -8.2%    

 

SE Asia managers ranked by sharia public equity assets (including balanced funds)
2015 2014 Company Geography Total
($ million)
Total
2014
%
change
1 1 Public Mutual Malaysia 6,182.1 6,551.4 -5.6%
2 2 CIMB Islamic Malaysia 3,162.0 3,995.6 -20.9%
3 4 Eastspring Investments Singapore 669.0 589.0 +13.6%
4 8 Franklin Templeton
Investments
US/Malaysia 557.9 454.0 +22.9%
5 5 Amundi  France/Singapore 530.0 555.0 -4.5%
6 3 BNP Paribas
Investment Partners
France/Malaysia 505.7 635.6 -20.4%
7 6 Nomura Asset
Management
Japan/Malaysia 488.2 533.0 -8.4%
8 7 AmInvest Malaysia 450.0 510.0 -11.8%
9 9 Asian Islamic
Investment Management
Malaysia 160.9 311.4 -48.3%
10 10 Mandiri Investasi Indonesia 96.1 105.5 -8.9%
11 12 Pacific Mutual Fund Malaysia 93.0 81.9 +13.6%
12 11 Trimegah Asset
Management
Indonesia 73.7 91.0 -19.0%
13 18 RHB Asset Management Malaysia 67.1 15.6 +329.4%
14 14 Kenanga Investors Malaysia 65.0 55.6 +17.0%
15 13 Maybank Asset
Management
Malaysia 54.9 58.3 -5.7%
16 15 PMB Investment Malaysia 53.6 49.6 +8.0%
17 16 Samuel Asset Manajemen Indonesia 24.0 48.4 -50.4%
18 17 Amanah Mutual Malaysia 12.3 21.3 -42.0%
19 - TA Investment
Management
Malaysia 12.3 - -
20 19 Hong Leong Asset
Management
Malaysia 4.1 6.1 -33.2%
      TOTAL 13262.0 14668.3 12.5%
      Y-o-Y growth -9.6%    

 

SE Asia managers ranked by sukuk/ sharia money-market assets
2015 2014 Company Geography Total
($ million)
Total
2014
%
change
1 6 Maybank Asset
Management
Malaysia 1,602.3 1,242.4 +29.0%
2 2 Asian Islamic
Investment Management
Malaysia 1,476.7 1,561.9 -5.5%
3 1 CIMB Islamic Malaysia 1,445.0 1,637.0 -11.7%
4 5 AmInvest Malaysia 1,197.0 1,287.0 -7.0%
5 8 Franklin Templeton
Investments
US/Malaysia 1,035.0 782.0 +32.4%
6 7 BNP Paribas
Investment Partners
France/Malaysia 1,018.7 951.3 +7.1%
7 4 Public Mutual Malaysia 1,011.5 1,475.7 -31.5%
8 3 RHB Asset Management Malaysia 993.5 1,490.3 -33.3%
9 9 Eastspring Investments Singapore 678.0 618.0 +9.7%
10 10 Amundi  France/Singapore 461.0 508.0 -9.3%
11 11 Nomura Asset
Management
Japan/Malaysia 242.8 199.0 +22.0%
12 12 Amanah Mutual Malaysia 171.3 176.5 -2.9%
13 13 Hong Leong Asset
Management
Malaysia 164.9 96.4 +71.1%
14 14 Mandiri Investasi Indonesia 67.3 88.3 -23.8%
15 15 Pacific Mutual Fund Malaysia 40.0 68.6 -41.7%
16 - TA Investment
Management
Malaysia 36.5 - -
17 16 Samuel Asset Manajemen Indonesia 26.2 27.1 -3.0%
18 17 Kenanga Investors Malaysia 21.2 25.7 -17.8%
      TOTAL 11688.9 12235.1 2.0%
      Y-o-Y growth -4.5%    

 

SE Asia managers ranked by sharia alternative assets
2015 2014 Company Geography Total
($ million)
Total
2014
%
change
1 3 Asian Islamic
Investment Management
Malaysia 480.7 282.3 +70.3%
2 1 Maybank Asset
Management
Malaysia 383.6 509.5 -24.7%
3 2 CIMB Islamic Malaysia 141.0 368.9 -61.8%
4 5 AmInvest Malaysia 70.0 99.0 -29.3%
- 4 RHB Asset Management Malaysia 0.0 129.3 -100.0%
      TOTAL 1075.3 1320.8 15.9%
      Y-o-Y growth -18.6%