Malaysia's Corston-Smith eyes Islamic fund

Tags: Corston-Smith

Written by Reuters
Wednesday, 02 September 2009 23:53

KUALA LUMPUR: Malaysia's Corston-Smith is planning a US$282.5 million (RM1 billion) Islamic fund as it sees growing demand for companies with good governance after high profile financial frauds hit investor confidence globally, said a top executive.

“I think the financial crisis clearly has elevated the reason why governance is so important,” said Shireen Muhiudeen, founder and managing director of Corston-Smith Asset Management.

“There's a great parallel between Islamic finance and corporate governance and transparency,” she told Reuters in an interview yesterday.

Syariah, a legal framework that regulates both public and private life, prohibits financial transactions from being purely speculative activity.

The Islamic law also bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol, pork, arms, pornography or gambling.

Corston-Smith's new fund will target international pension groups as potential investors, said Shireen.

“We are speaking to quite a few large pension funds around the world and shortlisted by a few government groups internationally,” she said.

Corston-Smith's existing portfolio of about RM90 million comprises Southeast Asian companies mainly from the oil and gas, oil palm PLANTATION [], retail, resource-based and manufacturing sectors, she said.

Corston-Smith invests in these sectors because it believes they will be the direct beneficiary of Asia's large population and growing economy.

“If you look at the Asean region, we got a very large population, and a very large population that's under 30. As a young population, playing on the consumers is important,” said Shireen, who has been in the fund management industry for 22 years.

The value of its Asean Corporate Governance Fund, a conventional fund that screens companies by a set of corporate governance criteria before investing, has gained 28% from June 2008 to end-August this year, outperforming the 18% fall in the FTSE Asean 40 index. UK fund manager Hermes owns 30% of Corston-Smith. — Reuters