Emirates NBD announced today the launch of the Emirates Global Sukuk Fund. The fund will be managed by Emirates NBD Asset Management Limited (Emirates NBD AM), a provider of a full range of investment products and services and the asset management arm of the Emirates NBD Group, the largest banking group in the Middle East in terms of assets.
The fund is a Jersey-domiciled, US dollar denominated, Sharia-compliant open ended fund that will invest in a portfolio of sukuk instruments issued by companies locally and globally. The fund seeks to achieve a high income as well as capital growth over a complete market cycle and is targeted at investors looking for higher yields available in the corporate space globally.
Through the fund, investors should be able to access attractive returns proportionate to risk taken. Lower lending activity, a lack of liquidity and increased selling pressure from international investors has resulted in wider credit spreads in the sukuk market. As a result, a number of issues with sound fundamentals are offering attractive yields.
The fund will distribute income on a periodic basis. Income distributions will take place on a semi-annual basis beginning in mid-2010. The distributions will be derived from income generated by the underlying sukuks, maturity proceeds of sukuk and the uninvested portion of any funds generated by sales of securities.
Our research indicates that the global sukuk market has a low and occasional negative correlation with the global equity and real estate markets. The fund therefore represents an effective diversification tool for investors exposed to these markets. Historically fixed income markets have also been less risky than comparative equity and real estate markets, said Deon Vernooy, Head of Emirates NBD AM.
The fund will be managed by Emirates NBD AM; a company licensed and regulated by the Dubai Financial Services Authority, and has been designed to meet the current demand for Sharia-compliant investment products with a high profit rate and relatively low minimum investment requirements. Emirates NBD AM (formerly Emirates Investment Services Ltd) recently won an award for the Best New Entrant in the Sukuk Market at the London Sukuk summit