Shariah Fund Beats Peers

Date: Thursday, April 16, 2009
Author: Shashank Shekhar, Business 24-7.ae

With year-to-date (YTD) return of 15.76 per cent by the close of March, the world's first Shariah-compliant gold hedge fund – the Dubai Shariah Asset Management (DSAM) Kauthar Gold Fund (DKGF) has outperformed its peers in the first quarter since launch.

The fund's YTD return stands higher than all other gold-based products, DSAM data showed.

Adherence to Shariah laws adds to the fund's strength, its managers said.

While the Philadelphia Gold and Silver Index (XAU), one of the most watched gold indices in the markets saw a return of 8.59 per cent until April, direct investment into the gold futures at Chicago Mercantile Exchange (Comex) in January this year would have guaranteed returns up to 4.35 per cent by April 1.

The Dubai Shariah Hedge Funds Index, which tracks the performance of all Shariah-compliant hedge funds in Dubai, gives a year-to-date return of 1.15 per cent, DSAM figures showed. "Our Gold fund has continued to significantly outperform his peers and the general markets. It seems gold stocks have been one of the best places to be. The Shariah solution is a top billing on a number of hedge fund sites," said Eric Meyer Chairman and CEO of Shariah Capital Inc, who along with Dubai Commodity and Asset Management (DCAM), launched the fund early this year.

DSAM is a joint venture between DCAM, a wholly-owned division of the Dubai Multi Commodities Centre Authority (DMCCA) and Shariah Capital, a Connecticut-based asset management company.

DMCCA invested $50 million into each of the initial four DSAM Kauthar funds as the seed investor, a total investment of $200m.

The DSAM offered returns of 4.42 per cent, 1.16 per cent and 9.59 per cent in January, February and March this year, which is significantly higher figure than all the other hedge funds that were simultaneously launched.

"Our gold fund returns are up and the fund is outperforming all its peers," a senior official of Dubai Commodity and Asset Management (DCAM), a company that is marketing the product, said. Meyer along with the Dubai Government formed the Dubai Shariah Asset Management that launched four funds in Dubai early this year. The funds include DSAM Kauthar Gold Fund.