Family office to launch multi-strategy Islamic fund
The Family Office, based in Bahrain, is launching a fund to serve Islamic clients in the Middle East who want to invest in a broad mix of strategies.
It will be compliant with Muslim Shariah law that forbids charging interest on loans.
Clerics also frown on most hedge funds because they speculate aggressively, although The Family Office is putting some together using a Shariah compliant platform.
Its fund, which will use in-house expertise, is seeking to raise up to $100m (€65m) from wealthy investors. It is run by chief executive Abdulmohsin Al-Omran, who founded the operation in 2004, following his departure from Goldman Sachs’ wealth management arm.
The firm manages $500m and employs several other former Goldman executives. Its chief investment officer is Kary Mack, previously a director of event-driven hedge fund Twin Capital and Credit Suisse private bank.
TFO is upbeat on prospects following the growth of Middle East wealth to $2.5bn, of which Shariah funds total $700bn, according to Moody’s Investors Service. The Shariah funds have grown in value by 15% over each of the last three years.
Al-Omran said: “Islamic finance remains a disseminated and fragmented market, with investors having to rummage to find suitable investments if any.”
The scene is fragmented because wealthy individuals tend to choose different advisers to manage each of their favoured asset classes.
According to Al-Omran: “An Islamic investor does not have a one-stop shop in which they are able to invest in one product that offers liquidity, diversification, international exposure and a low fee structure.”
Islamic bonds are restricted to the Sukuk market. They are not rated by credit agencies and lack liquidity. Equity funds tend to be restricted to the Middle East. Real estate and private equity funds tend to charge high fees.
Al-Omran wants to work with fund providers to broaden the spread of available products, as well as create one-stop shop opportunities. He said Islamic wealth managers have not been as successful as conventional providers because of the paucity of appropriate products and the high fees that attach to them.