Major US firm to launch Shariah compliant sovereign energy fund with ITFC

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US: One of the largest asset managers in the US will be launching an Islamic fund investing in energy trade finance assets owned by governments across the Muslim world, a sign of the growing acceptance of Shariah compliant vehicles by non-traditional markets as a platform for ethical investments. 

New York Stock Exchange-listed Federated Investors, which manages over US$370 billion in assets, is partnering with the International Islamic Trade Finance Corporation (ITFC) to roll out the ITFC Sovereign Energy Fund (ISEF) later this year. To be sponsored and managed by the ITFC, with strategic input from Federated Investors (UK), the Islamic fund will invest primarily in structured trade, export/import finance, supply chain financing and project finance assets of sovereign entities across the energy value chain in OIC member countries. It expects to raise US$300 million for its first close. 

“Federated Investors and [the] ITFC have worked together on a broad array of Islamic trade finance transactions since 2014. This joint initiative to create a new sovereign energy portfolio is tied to the belief that as the worldwide demand for energy continues to grow, a pool of trade finance transactions can consistently deliver the alpha that investors seek,” the ITFC said. 

Growing global demand for energy aside, the partnership is also a calculated move to capitalize on investment opportunities arising from ethical propositions. 

“After working with [the] ITFC over the past several years, we look forward to expanding our relationship by bringing Federated Investors’s specialized trade finance expertise, deep understanding of risk management and all the experience of Federated Investors’s global fixed-income team to investors pursuing attractive opportunities built on the highest ethical standards,” shared Gordon J Ceresino, the president and CEO of Federated Investors (UK). 

The US investment manager has had its fingers in the Islamic finance pie even before 2014. In 2010, its subsidiary – Federated Investment Management Company – became the sub-advisor to the Azzad Wise Capital Fund, the first Islamic fixed income mutual fund in the US.

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