HSBC Amanah Securities Services, part of HSBC Holdings, will more than double the value of the Islamic funds it services to exceed $10bn after it helps to set up funds in the next 12 to 18 months.
Demand for Islamic funds has risen in the past three to six months as the global economic slowdown prompted investors to seek alternative investments to help manage risk, according to Germain Birgen, Luxembourg-based global head of HSBC Amanah Securities. The unit will help set up more than 30 Sharia-compliant funds globally.
About $10 trillion was wiped from the value of global equities in the third quarter amid concern a worsening European debt crisis will derail global growth. Sharia law forbids gambling, investments in alcohol and receipt of interest, so fund managers have to select investments deemed halal, or permissible.
“Islamic funds are not exposed to the same level of derivative techniques as conventional funds,” he said in a telephone interview from Luxembourg today. “Conventional institutional managers, targeting institutional investors such as pension funds or insurance companies, are investing in socially responsible investments, which in most markets, Islamic funds fall under that category,” he said.