$150m Islamic hedge funds debut in Dubai
Shariah Capital and its partners have achieved what once was thought impossible: the creation and funding of a robust Shariah compliant hedge fund solution and a sovereign Shariah compliant alternative asset management company.
Last Friday, three Shariah compliant, commodity-linked equity hedge fund managers were seeded on the Al Safi platform by the Dubai Multi Commodities Centre Authority. DMCC is an agency of the Dubai government and a shareholder of Shariah Capital.
Through its wholly-owned Dubai Commodity Asset Management, DMCC also is Shariah Capital’s partner in a new joint-venture, Dubai Shariah Asset Management, which develops and distributes Shariah compliant, commodity-related investment products.
Each announced manager – Tocqueville Asset Management, Lucas Capital Management and Zweig-DiMenna International Managers – received $50 million from DMCC. Two additional managers will be seeded with $50 million each as well.
All of the managers will use Shariah Capital’s screening methodology and arboon short-sale solution to comply with Shariah. The five commodity strategies will be distributed by DSAM under the DSAM Kauthar brand name.
This is a personal success for Shariah Capital’s chairman and CEO Eric Meyer who a number of years ago went directly to Sheikh Nizam Yaquby and Shaykh Yusuf Talal DeLorenzo with the dream of finding a world-class Islamic hedge fund solution. These scholars encouraged him to keep pursuing this dream.
Some industry watchers have suggested that Al Safi’s funding and the launch of DSAM is a historic milestone in Islamic Finance. And it seems ironic that Islamic hedge funds should debut at such a bad time for the hedge fund industry as a whole but if they can make this work now then the future is surely assured. Their choice of commodity assets for the fund – which include gold – should also perform well as the US inflates its economy to avoid a depression and keeps commodity prices high.
