Archive for Islamic asset management

Malaysia: CIMB Aviva survey shows trend for capital guaranteed products

Malaysia: CIMB Aviva survey shows trend for capital guaranteed products

4 September, 2008

The investment environment might not look too rosy for now but people are still generally receptive towards investment products that offer guaranteed capital protection, investment diversification and insurance protection.

This is evident from the simple survey conducted in August 2008 by CIMB Aviva Malaysia (CIMB Aviva) which showed 67.9% of respondents saying they will invest in a product that offers all the three elements.

Asian markets such as China, India, Philippines, Indonesia, Thailand and Malaysia are still the preferred investment location with 74% choosing Asia as the continent that they think they would be interested to invest in now vs 10.7% for Australia or 5.4% for North America.

“CIMB Aviva decided to get some feedback on investor sentiment that is currently very difficult to predict due to unsettling factors such as global economy slowdown, rising cost of living and local political developments. This survey gives us a better picture of what to expect and supported the strategy of our latest product, CIMB Islamic Market Select,” said Encik Zainudin Ishak, CEO of CIMB Aviva Takaful Berhad.

“CIMB Islamic Market Select is a Shariah-compliant product which provides a 100% capital protected guarantee along with the upside of investing in 17 different countries. This means not only portfolio diversification that mitigates overall portfolio risk but also a higher potential for growth. The fact that most of those surveyed still view Asia optimistically means this is an ideal product for all,” he added

CIMB Islamic Market Select gives investors the opportunity to ride on the existing investment wave of mature markets such as the US, promising Asian markets such as China and India plus the added advantage of investing into new emerging markets such as Brazil and Turkey which are set to take off as the next investment hotspots offering potential for long-term growth potential.

When applied to historical data, Market Select’s dynamic investment allocation strategy gives average annual returns of 16.5% and 23.6% for its three-year and five-year plan which means potentially higher returns than a conventional fixed deposit account.

A CIMB Islamic Market Select investor also benefits from takaful coverage, which pays surviving nominees a maximum of 125% of his single investment if he passes away before the investment matures.

Market Select applies the Best Performing Strategy that refers to the Dynamic investment allocation strategy. With this strategy, the returns at maturity are allocated based on a 60:20:20-allocation rate for the three market categories. This means investors enjoy 60% of the return based on the best performing category and 20% respectively for the remaining two categories. This product offers the option of a three-year and a five-year select terms with the latter having the added flexibility of providing yearly income distribution.

CIMB Islamic Market Select is available at all CIMB Islamic branches, which are co-located at CIMB Bank’s 366 branches nationwide until 19 September 2008. For further information, investors can call 1 300 880 900 or visit http://www.cimbbank.com.my.

-ends-

Enquiries:
Andi McLennan
Director of Marketing
CIMB Aviva Assurance Berhad
Telephone: 03-03-2612 3724
E-mail: andi@cimbaviva.com

Tricia Loh
Head of Brand & PR
CIMB Aviva Assurance Berhad
Telephone: 03-2614 3599
E-mail: tricia@cimbaviva.com

Notes to editors:

What questions and answers did we get?

1. Which age range do you fall into?
Above 50 6.25%
Between 41 and 50 15.18%
Between 31 and 40 43.75%
Between 21 and 30 32.14%
Under 21 1.79%
2. Your current annual gross income level is:
Under RM24,000 11.61%
Between RM24,000 and RM50,000 41.07%
Between RM50,000 and RM100,000 33.04%
Above RM100,000 11.61%
3. What is the average savings amount in your deposit account now?
Below RM1000 32.14%
RM1000 – RM5000 25.89%
RM5000 – RM20,000 18.75%
RM20,000 – RM50,000 14.29%
Above RM50,000 8.04%
4. Currently, do you think you have enough savings to cope with rising cost of living?
Yes 10.71%
No 86.61%
5. If you have excess cash in hand, where would you prefer to put it at present?
Keep in the bank 26.79%
Invest in shares 8.93%
Invest in unit trust or insurance 22.32%
Invest in properties 27.68%
Other 13.39%
6. Which of the following continents in the world do you think would be interesting to invest in now?
North America (eg US, Canada) 5.36%
South America (eg Argentina, Brazil) 3.57%
Africa 3.57%
Asia 74.11%
Australia 10.71%
7. Which of these markets would you choose to invest in if given the choice?
Developed markets eg US, Europe & Japan 25.00%
Asian markets eg China, India, Indonesia, Philippines, Malaysia and Thailand 59.82%
New markets eg Russia, Kazakhastan, South Africa, Brazil, Egypt, Turkey, Mexico and Vietnam 14.29%
8. How confident are you now to invest your money vs two months ago?
Very confident 1.79%
More confident 11.61%
Neither confident nor not confident 51.79%
Less confident 27.68%
Not confident at all 8.04%
9. What is your primary investment objective?
Highest potential returns 28.57%
Growth of income 35.71%
Diversification across different asset classes 8.04%
Secure investing 26.79%
10. If you could securely invest your excess money in your deposit account within 17 countries across Asia, Africa, Europe, North and South America whilst benefiting from 100% capital protection and with an element of additional life cover protection, would you do so?
Yes I’d invest 67.86%
No I’d leave my money in my deposit account 8.93%
I don’t know 23.21%

Which countries does CIMB Islamic Market Select invest in?

Developed Markets US, Europe and Japan
Asian Emerging Markets China, India, Indonesia, Philippines, Malaysia and Thailand
Next Emerging Markets Russia, Kazakhastan, South Africa, Brazil, Egypt, Turkey, Mexico and Vietnam

Who is CIMB Aviva?
CIMB Aviva is a joint venture company between CIMB Group and Aviva plc. CIMB Group is Malaysia’s second largest financial services provider and one of Southeast Asia’s leading universal banking groups, and Aviva is the world’s fifth largest insurance group* and the largest insurance services provider in UK.

Through the joint venture, CIMB Aviva offers a comprehensive range of life insurance and takaful products and services via the 366 branches of CIMB Bank and CIMB Islamic, two subsidiaries under CIMB Group.

CIMB Aviva also rides on the global expertise of Aviva, which services 45 million customers in 27 countries around the world. Aviva recorded total sales of £49.2 billion (RM337.5 billion) at 31 December 2007 and funds under management of £359 billion (RM2.28 trillion) at 30 June 2008.

*based on gross worldwide premiums
Average exchange rate 1£ = RM6.86 (2007), RM6.34 (6-month 2008)

Source: http://www.aviva.com/index.asp?PageID=55&category=aviva&year=2008&newsid=4367

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Product development for Islamic banks discussed at MEFX conferences

Product development for Islamic banks discussed at MEFX conferences
By: Mike Gallagher

Greater visibility needed if Islamic finance is to become internationally acceptable. International listings and uniformity of standards key to spread say delegates.

MEFX, Islamic real estate investment trusts, Sukuk, Qatar, Alpen Capital, Sanjay Vig, Saadiq, Ghazanfar Naqvi, Mobily Sukuk, standardisation

Delegates at the Future Proofing Your Bank MEFX conference in Dubai on Sunday discussed the vexing issue of product development from an Islamic finance perspective. Standardisation was given the most attention, as it always seems to at conferences where Islamic finance is discussed, but how much progress is taking place with regards to the subject is still not certain.

Sanjay Vig, managing director of Alpen Capital, which was behind several high profile Sukuk, such as the Berber Cement Sukuk in Sudan and the Mobily telecoms issuance in Saudi Arabia, pointed out that the issue of standardisation was not just an issue between regions, but also sometimes between countries. He said that while the Mobily Sukuk was accepted in Saudi Arabia, it was not in the UAE.

Vig also said that sorting out the critical issue of uniformity was vital if Islamic finance wanted to become globally acceptable. Uniformity and replication of products would speed up the process because the complex documentation that is part and parcel of the current trend in Islamic finance was slowing down its spread. Any bank that became involved had to run the product past its Shari’ah board, which also added to the time it took to bring it to market. Uniformity would greatly speed up that process, he said.

Ghazanfar Naqvi, director of Islamic products for Saadiq in the UAE added that very few law firms in the region understood Islamic finance and he said they needed “to gear up” to be able to meet demand. One thing that would help product development, said Naqvi, would be if more conventional bankers moved over to Islamic banking. “You cannot teach banking to everyone, but you can teach Islamic [law],” he said.

Delegates were told that not more than 20 to 30 per cent of Islamic banks portfolios from the GCC are invested outside the region and that more diversification of risk was required. This, they were told, would also help to increase the awareness and popularity of Islamic finance.

Vig said that more international listings of Sukuk on exchanges like New York, Hong Kong and London would increase its visibility and he said would assure investors that by listing there, that they were meeting internationally recognised standards.

There was also talk among delegates about the role of Takaful in markets such as the UAE and Qatar where a huge real estate boom was taking place. Many wondered why Takaful had such a small share of the market, compared to conventional insurance, when so much money was being invested in real estate. Others expressed wonderment at why Islamic real estate investment trusts were not more popular, given that India, Pakistan and Malaysia were actively considering them.

Source: http://www.cpifinancial.net/v2/News.aspx?v=1&aid=431&sec=Islamic%20Finance

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Islamic investors ‘ignore’ important assets

Islamic investors ‘ignore’ important assets
by Reuters on Wednesday, 28 May 2008

Lack of diversity in their investments could mean Islamic asset managers lose out to conventional firms, a report published this week said.

Accounting firm Ernst & Young said Muslim investors hold $1.6 trillion in assets of all kinds, a figure forecast to rise to $2.7 trillion by 2010.

Islamic funds, which invest in accordance with Islamic law, ignore important asset classes and in Saudi Arabia, one of the world’s two biggest markets for Islamic asset management, fund subscription has fallen since 2005, the report said.

“As demand for diversification grows, Islamic institutions will face the risk of losing significant market share to conventional institutions that can provide more comprehensive coverage,” Ernst & Young said in the report.

By the end of March there were more than 500 funds globally that comply with Islamic law, Ernst & Young said in its Islamic Funds and Investments report, launched at a two day Islamic banking conference that ended on Monday.

Some 153 Islamic funds were launched last year, and the figure is projected to rise to 1,000 funds by 2010, Ernst & Young said.

A key gap in the variety of investments offered by Islamic funds are fixed income assets, such as Islamic bonds. Only 7% of Islamic funds target such assets, compared with 22% of conventional mutual funds.

Issuance of Islamic bonds, or sukuk, has been slowed by a global credit crunch triggered by defaults on US home loans last year

The secondary market for the instrument is small, as most sukuk buyers hold the asset to maturity, and bankers complain of a lack of market makers.

Other assets under-utilised by Islamic funds include commodities and Islamic Real Estate Investment Trusts (REITS).

Equities are the dominant asset class for Islamic funds, with allocation above that in conventional funds. In Saudi Arabia, a stock market crash in 2006 continues to weigh on investor sentiment.

“Saudi investor confidence remains low following stock market corrections in 2006,” Ernst & Young said.

Despite the lack of diversity in asset classes, Islamic funds have increasingly diversified the geographical reach of their investments, and last year 76%t of them targeted regions outside the Middle East and Africa, Ernst & Young said.

Last week, Bahraini Islamic lender Ithmaar Bank was among a group of firms to launch a Latin America real estate fund, while fellow Bahraini lender Gulf Finance House has launched an energy fund in Kazakhstan.

Islamic law prohibits interest, and bans investment in certain business sectors, such as alcohol, pornography and gambling.

Source: http://www.arabianbusiness.com/520533-islamic-investing-must-diversify-to-compete-report?ln=en

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