A rise in Sharia compliant philanthropy is supporting the growth of the global Islamic endowment sector which is estimated to be worth $105bn.
A study by Ernst & Young has found that the Islamic endowment sector, Waqf, is becoming more structured as clients place more emphasis on sustainable philanthropic investments.
Waqf is already an integral part of Islamic countries’ economic system with an existing investor base comprising of high net worth individuals and family offices.
The research also found that the Islamic funds industry taps into only 11% of its estimated $480bn wealth pool, providing opportunities for Islamic asset managers to diversify from basic (vanilla) equity market products and expand to new asset classes.
Tapping the Waqf cash wealth pool
Ernst & Young head of Islamic financial services Ashar Nazim said the cash Waqf sector alone is estimated at $35bn.
Nazim said that the introduction of professional investment managers could help the cash Waqf sector regain strength and could potential generate $2-3bn annually.
The report forecast that Islamic endowments, both in real estate and cash, were likely to yield new opportunity for Islamic fund managers.