Faith-based investing put to the test (By IFN)

GLOBAL: JP Morgan Asset Management has liquidated its Global Catholic Ethical Balanced Fund as it failed to gather the same momentum seen by Shariah compliant funds.

The firm said that its decision to liquidate the fund, which aimed to mirror the success of Islamic funds, followed reduced prospects of attracting new investments.

This is also despite the fund posting positive returns during its life cycle, returning 10.18% over a one-year period and 7.8% in the year-to-date. However, the Luxembourg-based fund only recorded net assets of EUR4.3 million (US$5.31 million) as at the end of May this year, compared to a target of US$30 million.

The fund’s mandate was to provide long-term capital growth through investments in a portfolio of global equities and debt securities issued by the EU governments.

Relative to the growth of Islamic funds, JP Morgan’s Catholic fund has indeed fallen short. In comparison, CIMB-Principal Islamic Asset Management, seen as a global leader in the Islamic asset management space, recorded assets under management (AUM) equivalent to US$8.82 billion as at the 30th November last year, while NCB Capital’s AlAhli Saudi Riyal Trade Fund, touted as the largest Shariah compliant fund in the world, holds US$4.4 billion in AUM through 26 mutual funds.

Nonetheless, with the Islamic asset management industry still seen as a nascent market within the wider Islamic finance space, JP Morgan’s case should serve as a reminder to the industry not to rest on its laurels.