Saudi Investors flock to new Islamic Fund.

A new Islamic fund targeted at Saudi investors has raised more than $50 million since its launch at the start of April, advisers to the fund say. The open-ended Crescent Fund is managed by Riyadh-based Arab National Bank. The fund invests in global equities that conform with Shariah principles, and has as its benchmark the Morgan Stanley Capital Index (MSCI)-World Index.

Saudi bankers say that although the fund will have a flexible attitude to the geographical spread of investments, attention has so far focused on North America and Western Europe. "The fund will play to the strengths of its management team, and investments will be made in markets they understand. The Crescent Fund has virtually no exposure to emerging markets," says one local banker.

He adds that investors have been particularly attracted by the fund's Islamic qualities: "The publication by SAMA [Saudi Arabian Monetary Agency - central bank] of the breakdown of assets in funds has shown that there is a strong demand for both equity funds and Islamic instruments: the Crescent Fund meets both demands."

ANB is being advised on the management of the Crescent Fund by London-based Schroder Investment Management International through its subsidiary Schroder Asseily. Says Philip Winder, Schroder Asseily director: "The rate at which the fund has grown exceeded expectations: it has already doubled initial targets and is continuing to grow." He adds that one of the benefits of Islamic instruments is that they can attract investors with longer-term investment horizons. "There has been a dramatic growth of Islamic banking activity over the last ten years and Schroder is taking an increasing interest in it," says Winder.