Bank of London and The Middle East (BLME), London’s leading wholesale Sharia’a compliant bank whose main shareholders include Boubyan Bank, the Kuwait Securities House and the Public Institution for Social Security in Kuwait, has launched the BLME High Yield Fund, a Sharia’a compliant fund which targets institutional and high net worth investors in Gulf countries seeking to generate higher returns than those targeted by BLME’s US Dollar Income Fund.
The BLME High Yield Fund targets a net return of three-month USD Libor (London Interbank Offered Rate) in addition to a 5% return per annum by investing up to 85% in Sukuk (often referred to as Islamic bonds) and 15% in Ijara (a lease contract on an asset). The Sukuk market has become more liquid and diversified, and provides the fund with the opportunity for strong returns.
The BLME High Yield Fund is an open-ended fund, with a minimum investment of USD250,000 with Sterling and Euro share classes also available. The fund is part of BLME’s existing Sharia’a Umbrella Fund SICAV-SIF and is domiciled in Luxembourg. The fund has been launched with a USD10m of seed capital.
"The BLME High Yield Fund responds to the demand we have seen from institutional and high net worth investors for a fund with a higher risk/return profile," says Nigel Denison, the Head of Asset Management at BLME. "This is the second new compartment to be launched under BLME’s Sharia’a Umbrella Fund this year and highlights BLME’s continued commitment to developing competitive Sharia’a compliant funds across a range of asset classes. We believe that asset management will not only be central to our continued development but also to the future growth of the Islamic finance industry."
The Sukuk market continues to rally strongly. Despite ongoing unrest in Yemen, Libya and Syria, contagion to the rest of the region is viewed as limited. With these factors in place, the BLME High Yield Fund is expected to exceed its target return.
