MUSLIM Australians will be able to stash their cash with today’s launch of Crescent Wealth’s first Islamic cash management trust, which hopes to attract up to $100 million during the next few years.
Managing director Talal Yassine said he expected much of the money to come from Australian mosques. “Islamic Australians and institutions have had little choice so far but to put their cash reserves in non-compliant cash trusts,” he said.
Funds will be passed to HSBC Amanah Malaysia Berhad, which is partnering the product with Crescent, and will be invested in Australian-dollar denominated Islamic term deposits.
Because paying interest is prohibited under Islamic law, the sharia-compliant trust instead pays a fixed profit, expected to be the equivalent of 3 per cent to 4 per cent a year.
The fixed return to Australian investors will stem from palm oil trading profits, where HSBC’s Malaysian subsidiary will bear the trading risk.
Crescent Wealth, which launched its first Australian equity fund last October, plans to launch other funds and wants to expand into superannuation.
“Australia’s Islamic community, about 500,000 strong, is relatively small compared to France’s or Britain’s but the compulsory saving system here makes it a potentially large market,” Mr Yassine said.
Crescent Wealth says sharia-compliant funds could attract about $6 billion of funds and potentially three times that by 2019.
Global assets in Islamic banking exceed $1 trillion, including about $60bn invested in equities according to Islamic law. Australia’s big four banks do not offer sharia-compliant retail products.
Crescent Wealth launched an Australian equity fund last year, which doesn’t invest in companies with excessive debt levels or that hoard cash. Investing in firms engaged in financial services, tobacco, alcohol, armaments or pornography is also ruled out.
An index of sharia-compliant Australian equities has fallen 9 per cent since it was established in August, a little more than the ASX/S&P 200.