Shariah-compliant funds are invested in line with basic Islamic principles. For example, no stocks may derive income from gambling, alcohol, tobacco, pork products, adult entertainment or military equipment. The principles also restrict the use of some mainstream financial instruments such as debt-financing, charging interest or the use of derivatives.
The fund also takes into consideration ESG factors. Since 2015, the Malaysian firm has had a strategic partnership with UK-based Arabesque Asset Management, which is an ESG-quant investment management firm, according to BIMB IM’s website.
Arabesque makes use of a platform to monitor the sustainability metrics of 4,000 corporations globally. The platform also includes big data, which combines at least 200 ESG metrics.
BIMB also manages four ESG shariah equity funds that make use of Arabesque’s ESG platform. Last month, it launched the BIMB-Arabesque ValueCap Malaysia Shariah-ESG Equity Fund. In January, it launched the Asia Pacific Shariah-ESG Equity Fund.
The firm expects that the ESG sukuk fund’s assets will reach RM 150m ($36.65m) within a year, while the Malaysia Shariah-ESG Equity Fund is expected to reach RM 100m, according to separate local media reports.
The firm’s first ESG shariah fund, the I Global Dividend Fund, which was launched in 2015, has around $40m in assets, according to the factsheet.
BIMB is a wholly-owned subsidiary of Bank Islam Malaysia. As of the end of June, the firm managed 12 fund products that collectively have RM 2.44bn in assets.
The BIMB-Arabesque I Global Dividend Fund versus its benchmark and sector in Malaysia