Three years on, no funds have been marketed under the initiative, reflecting the struggle to expand the global Islamic asset management industry and the long road ahead to develop the business.
"It was just slightly unfortunate timing," he said, referring to the onset of the global financial crisis. "There is a tremendous opportunity."
Gray said the outlook will improve as global markets stabilise but some other market watchers are less sanguine, projecting that growth is likely to lag the industry's overall 15-20 percent annual rise.
While the global financial crisis has sparked interest in Islamic finance in markets ranging from Ireland and Kazakhstan to Thailand and South Korea, the enthusiasm has barely rubbed off on the sharia-compliant fund industry.
Consultants Ernst & Young warned that the Islamic fund industry has stagnated, with 27 Islamic fund liquidations last year, almost the same number as the 29 funds launched.
More than two-thirds of Islamic fund managers have less assets under management than the $80-100 million estimated break-even size, and the number of liquidations are likely to rise unless they can achieve sufficient scale, it said.
Practitioners say asset managers have to overcome several obstacles: a limited pool of assets to invest in, a shortage of religious scholars who can advise on the sharia compliance of funds and tax and regulatory environments that make it hard for demand for Islamic assets to thrive.
"I'm not sure we will get close to 15 to 20 percent (growth)," said Chaaban Omran, chief executive of Australia-based Islamic asset managers Crescent Investments Australasia.
"For the whole of Islamic investments, even finance to a certain extent, what we need to do is push the need for risk-sharing. When the common person sees that this is the underlying reason for these types of products, there will be more acceptance."
He said only roughly 300 of the 1,500-2,000 stocks in the Australian market were deemed to be sharia-compliant, limiting the range of investment opportunities for Islamic investors.
While the pool of sharia-compliant equities is considerably bigger in most Muslim countries, Islamic asset managers still have far fewer investing choices than conventional managers who have the alternative of interest-based instruments.
Between $360 billion and $480 billion of individual and institutional savings are available for the Islamic fund industry to tap, Ernst & Young estimated.
source : Sify.com