By Bernardo Vizcaino
SYDNEY, Oct 9 (Reuters) - Australian fund manager Crescent Wealth has appointed the Bank of London and The Middle East (BLME) as the investment sub-advisor to its Islamic cash fund, to manage its allocation in sukuk, or Islamic bonds, the company said on Wednesday.
The move marks the first time Australian retail investors will have access to sukuk - investment certificates that follow religious guidelines such as a ban on interest and monetary speculation.
Crescent Wealth's existing range of sharia-compliant products includes a domestic equity fund, and it plans to launch an international equity and property funds later this year.
"The aim is to cover all asset classes, towards offering customers a balanced superannuation (pension) solution," Talal Yassine, managing director of Crescent Wealth told Reuters. "The long-term aim is to distribute the cash fund through a superannuation platform in Australia."
Crescent Wealth has under A$5 million ($5.1 million) in assets under management and advice, with A$1.14 milion in the cash fund, and it sees significant potential for Islamic funds in the Australian market.
Crescent also plans to launch the country's first Islamic pension fund, and hopes to build the fund to between A$4 billion and A$6 billion in five years.
Under the agreement, BLME will manage the fixed income portion of the cash fund, capped at 50 percent of holdings and limited to investment-grade sukuk. The remaining cash component will be held in term deposits with HSBC Amanah, the Islamic arm of HSBC.
BLME, the largest Islamic bank in Europe, already manages a similar income fund that is 55 percent invested in sukuk and has $60.9 million in assets under management. It launched a high yield fund in May of last year, which is 95 percent invested in sukuk with $11 million in assets.
"2012 has been a landmark year for sukuk," said Nigel Denison, head of asset management and treasury at BLME. "As longer dated U.S. dollar swap rates fall, the sukuk market will continue to out-perform many conventional bonds and in doing so attract new investors on a global scale." ($1 = 0.9796 Australian dollars)
(Editing by Richard Pullin)
Keywords: ISLAMIC FINANCE/FUNDS