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Russian fund targets Islamic investors

The growing need for niche investments has led one Russian house to specifically target Islamic investors with a fund operating in line with Sharia, or Islamic religious law. The BKS- Halal Fund was was set up by BrokerCreditService (BCS).

Overseen by a Muslim non-commercial organisation, the fund will ensure that investment doesn’t go into alcohol, the promotion or production of alcohol, pork, and media which handles pornography or a lifestyle not in accordance with Islamic values. Islamic law also prohibits usury – or the collection and payment of interest.

“In our fund, as in other Islamic investment instruments, there will be no products with fixed income or any kind of bonds or credit products. We will invest into companies’ shares. And investors will be sharing the profit of the company by getting dividends, which is absolutely in line with Sharia guidelines,” said Vladimir Solodukhin, the head of Asset Management, BKS.

Market players say the demand for the fund may be limited, with there currently being no market for Halal funds in Russia.

Currently about 10% of Russia's 500,000 mutual fund investors are Moslem.  But if Russia's investment class comes to match its general population this could be expected to jump.

For now the founders expect the fund to attract more than $US 40 MLN and say it will guarantee spiritual comfort to its investors, and a healthy return.