Thomson Reuters, Crescent Wealth to launch Islamic Australia Index

Starting in early February, Thomson Reuters and Australia’s Crescent Wealth are jointly launching Islamic Australia Index – a research-based index that will offer local and international investors a tool to help invest in the Australian market in accordance with Islamic investment principles.

The initiative comes ahead of an expected government proposal to change tax guidelines to help open up the local market for Islamic investment products, though there remains some concern about the market’s growth potential.

Called the Thomson Reuters Crescent Wealth Islamic Australia Index, the measure will cover 143 stocks with combined market capitalisation of $160 billion. The companies are screened to ensure they adhere to sharia law.

Islamic finance prohibits the earning of interest, choosing to focus instead on the buying and selling of tangible assets such as property under the principles outlined within sharia law.Thomson and Crescent Wealth said in a joint statement.

“Creation of the index is a key step toward positioning Australia as an attractive destination for global Islamic investment funds. It is estimated Islamic banking assets globally now exceed $US1 trillion, and that there is $US50 billion in managed funds investing in equities according to Islamic principles.”

Crescent Wealth aims for $3bn pool by 2019

AUSTRALIA’S first Islamic fund manager Crescent Wealth is aiming high, but will it deliver?

The company “would be happy” with $3 billion under management by 2019, which represents nearly a quarter of the $13bn pool of funds expected to be allocated to Islamic fund managers by then.

That’s a big number given the Crescent Australian Equity Fund, which launched in October, had about $US5.5 million under management, but it isn’t insurmountable given Crescent is the first and only Australian wealth manager specialising in Islamic investing.

CAEF is its first of four planned funds, the others being an International Equity Fund, an Income Fund and a Diversified Property Fund.

All four will form Australia’s first Islamic superannuation option and will be open to both institutional and private investors and will target Muslim community organisations, high net worth individuals as well as institutions both in Australia and offshore.

The group’s recently announced advisory board members include former non-executive director of Citibank Emeritus Professor Dianne Yerbury, former Macquarie Group duo Ted Pretty and Moustafa Fahour, Aon Hewitt chief investment officer Janice Sengupta and deputy chair of WorkCover Nicholas Whitlam.

Aon Hewitt helped seed CAEF – which has a target size of $500m – with an initial investment from its $2 billion fund, the Aon Master Trust, which offers the option of ethical investing and screens out industries such as tobacco, alcohol and gambling.

But even with a growing demographic of Muslims in Australia, Islamic finance is expected to be slow taking off Down Under.