Shari’ah Funds – A Bermuda Perspective

Prior to the global financial crisis, the Islamic banking, finance, insurance (takaful) and investment markets were riding a wave of unprecedented growth.

Banking was growing 15-30 percent annually, with trading levels having increased from US$70 billion in 2005 to US$300 billion in 2008. The takaful industry was growing at an annual rate of 20 percent. The asset growth rate in the Islamic finance industry from 2005-2008 was 400 percent with the industry worth more than one trillion dollars in early 2008.

The global financial crisis may have put an end to that rapid growth, but Islamic finance however may be moving toward providing a new mainstream alternative to western banking and investment products. This development is fuelled partly by the belief that Shari'ah compliant products may not be as vulnerable as conventional products. For instance, the residential sub-prime mortgage backed securities would not have been permissible under Shari'ah investment