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Saturna launches ASEAN Islamic wholesale fund in Malaysia

By Bernardo Vizcaino

Feb 11 (Reuters) - Kuala Lumpur-based Saturna Sdn Bhd, a subsidiary of U.S.-based Saturna Capital Corp, has launched a sharia-compliant wholesale equity fund targeting institutional investors through an unusual low-fee structure.

The ringgit-denominated fund will invest in equities across the Association of Southeast Asian Nations, imposing no sales or redemption charges and no minimum holding period.

The fund has no management fee, instead opting for a 10 percent performance fee, a structure aligned with the long-term interests of unit holders, Monem Salam, president of Saturna, told Reuters.

"We are aligned to investors - if they make money we make money, but if they lose money we don't make anything at all."

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, a parallel which Saturna stresses.

The last few years have been difficult for Islamic funds with 105 closures since 2011, a study by Lipper and Thomson Reuters found, thanks to the global financial crisis and a slump in equity markets that hurt investor interest.

The wholesale format of its new fund will allow Saturna, whose parent firm has $4 billion in assets under management, to offer the fund through Malaysia's voluntary Private Retirement Scheme, Salam said. The company will also target high net worth individuals.

As of December, there were 193 wholesale funds in Malaysia with assets worth 59.5 billion ringgit ($17.8 billion), out of which 52 funds where sharia-compliant with 16.4 billion ringgit in assets, data from Malaysia's Securities Commission showed.

These figures represent a roughly four-fold increase from December 2010 for both conventional and Islamic wholesale funds. (Editing by Andrew Torchia)