Going the Islamic way!

Its the Islamic era! Be it Islamic banks, Islamic bonds or Islamic mutual funds, Shariah compliant investment avenues are becoming the investors most favoured investment options globally. In line with the growing inclination towards Shariah compliant investment avenues, the countrys fund managers are continuously seen introducing Islamic mutual funds to cater to the investors needs.
The latest in the series is the launch of an Islamic equity fund by National Investment Trust Limited (NIT) that has been able to muster over Rs3.9 billion during the phase of private placement and initial public offering. As of now, the mutual fund industry boasts a decent number of 12 funds in the Islamic Equity category having an asset size of Rs47.5 billion and representing approximately 10 percent of the industrys total assets under management, as of April 2015. With the addition of NITs newly launched fund, the aggregate fund size of this category is likely to have crossed Rs50 billion marks this month. Besides, this marks the launch of the industrys second Islamic equity fund since the beginning of CY15.
It should be noted that Shariah compliant funds are being launched across the board and are not just restricted to the equity category. Nonetheless, the scale remains titled towards equities with regards to the number of launches.
Like many other Shariah compliant equity funds, NIT-Islamic Equity Fund will track the performance of KMI30 index which will serve as its benchmark. Mind you, there are around 160-165 Shariah compliant scrips out of which 30 companies represent the KMI30 index.
Moreover, it is pertinent to note that Islamic equity funds, on average, have secured an edge over conventional equity funds in terms of performance since the beginning of FY15, having surpassed the conventional equity category by a healthy 200bps on a year-to-date basis.
With the successful launch of Islamic equity fund, NITs management is now eyeing subsequent launches in other Islamic categories as well. As for the performance, "Our goal is to exceed or at least match the benchmarks performance", said Manzoor Ahmed, the Chief Operating Officer of NIT Asset Management. And given the robust performance track record of NITs funds especially in the equity category, it will be interesting to see how the asset managers are able to take the lead in the Islamic segment.