The growing importance of fintech and alternative investing were among the key trends highlighted at the second annual Franklin Templeton Islamic Forum held at the St. Regis Kuala Lumpur on 25 April, themed ‘Evolving with Times’. 

The forum focused on the evolution of investment opportunities within the context of broad-based growth and demand for Shariah-compliant investment strategies.

Drawing delegates from across Southeast Asia and the Middle East, discussion centered on the importance of global Islamic finance and the growing sophistication of affluent Muslim communities, alongside the evolving needs of institutional investors. 

Among the issues addressed were the challenges to achieving mainstream recognition and acceptance for Islamic finance as well as the sector’s continued efforts to adapt to digital innovation. 

In his keynote address, H.R.H. Sultan Nazrin Muizzuddin Shah, Sultan of Perak Darul Ridzuan and Royal Patron of the Malaysia International Islamic Financial Centre (MIFC), spoke about the importance of evolutionary innovation and touched on strategies that may take the Islamic finance industry to the next level, stating: “For Islamic finance to reach its full potential, it has to find new ways of financing and at the same time maintain the very principles that set it apart from conventional finance. Investors recognise the potential of this market and are moving to capitalize upon it. Islamic Finance is expanding into new products and solutions, which ultimately will make it easier for investors to gain access for years to come.”

Among the innovations in Islamic finance is Green Sukuk, an approach that allows financial investments to flow into sustainable development projects and encourages the development of a more sustainable economy. Delegates commented on how the increasing demand for Shariah-compliant assets has led to renewed interest in product innovation. 

Alternatives and smart beta strategies along with the adoption of artificial intelligence (AI), robo-advisers and digital currencies are being explored within the ongoing debate over Shariah guidelines.

Commenting on the emphasis on diversifying Shariah-compliant investment strategies, Adam Quaife, Regional Head, Southeast Asia for Franklin Templeton said, “The outlook for Islamic finance is encouraging, and we remain confident Malaysia will continue to play a major role in this sector. Globally, total investment in Franklin Templeton Shariah-compliant strategies grew by 32% last year to reach nearly US$2.4 billion at the end of 2017. This level of investment demonstrates the opportunity for Shariah-compliant strategies to continue to be attractive to investors.” 

Reaffirming Franklin Templeton’s positioning in Malaysia, Avinash Satwalekar, Country Head of Franklin Templeton Investments (Malaysia), said, “One way to balance risk and returns in an investment portfolio is to include Shariah-compliant investment strategies. It is a proven fact that Shariah-compliant solutions such as Sukuk have low correlations to conventional asset classes.”

“The Shariah investment sector has grown significantly over the last 30 years, and we look forward to working alongside policymakers including Bank Negara Malaysia and Securities Commission Malaysia, Shariah scholars and the Islamic financial industry community to spur the market forward, in Malaysia and beyond.” 

This year’s forum follows the inaugural Islamic Forum hosted by Franklin Templeton in Dubai in 2017. As a globally recognised asset management company, Franklin Templeton’s two major Shariah investment hubs are located in Kuala Lumpur and Dubai. In meeting the need of investors globally, the company offers a range of Shariah-compliant investment strategies, ranging from fixed income (Sukuk), equities, multi-assets as well as alternatives. For more information on the forum, please visit www.franklintempleton.com.my/iforum. 

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