Threadneedle opens in Malaysia, eyes Islamic funds

October 11, 2013

KUALA LUMPUR, Oct 11 (Reuters) - Britain's fourth largest retail fund manager, Threadneedle Investments, plans to offer a range of sharia compliant funds in Malaysia, as the Islamic fund sector gradually revives after years of stagnant growth.

Threadneedle, which manages $126.6 billion in assets, has appointed a Malaysia-based team that will be supported by its Singapore and London offices, the company said in a statement.

The last few years have been difficult for Islamic funds as a whole, with Western firms pulling out as they were hurt by the global financial crisis and as slumping equity markets reduced investor interest. In total, 88 Islamic funds have been liquidated globally in the last two years.

Malaysia has fared better even though the number of new fund launches has slowed in recent years, but Islamic wholesale funds have bucked the trend with 13 launches last year.

Threadneedle, owned by U.S. Ameriprise Financial, will target institutional investors such as pension funds, insurance companies, and government-linked entities.

"With the presence of these new capabilities, we aim to make Threadneedle a centre of excellence for Islamic finance in Malaysia," said Raymundo Yu, the firm's Asia Pacific chairman.

"This is an important strategic milestone for Threadneedle and further demonstrates our commitment to building a truly client-focused business for investors across Asia."

Total Islamic assets under management in Malaysia reached 79.6 billion ringgit ($24.9 billion) in 2012, from 64.2 billion ringgit a year earlier, a 24 percent increase.

Islamic fund managers screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling, in much the same way as socially responsible funds.