In a landmark collaboration that underscores a growing trend toward ethical investment practices worldwide, ASB Capital—a purpose-driven asset management firm—has unveiled plans to launch a new global equity Shari’a compliant fund in partnership with State Street Global Advisors (SSGA). This innovative fund, domiciled in the Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA), aims to provide institutional investors, family offices, and individual investors with broad exposure to publicly listed companies across global markets while adhering to the strict guidelines of Shari’a-compliant investing.

A Strategic Partnership for a Changing Global Investment Landscape

The new fund represents a significant step forward in merging globally recognized investment strategies with the ethical principles intrinsic to Islamic finance. With a total initial asset under management (AUM) of US$4.5 billion, ASB Capital has long been a harbinger of innovative investment solutions within a rapidly evolving market environment. The firm’s strategic partnership with SSGA—a leader with decades of experience in active global equity management—enables the fund to benefit from robust research methodologies and diversified global insights.

At the heart of this collaboration lies SSGA’s Active Fundamental Equity team, which manages over USD 18 billion in assets as of December 31, 2024. The team’s impressive track record, built upon a research-driven approach and the proprietary Confidence Quotient Framework, empowers them to identify high-quality companies with durable growth prospects and attractive valuations. This blend of rigorous research and ethical considerations allows the fund to tap into the potential of the global equity landscape while ensuring compliance with Shari’a principles.

The Core of Shari’a Compliant Investing

Shari’a compliant investing is defined by its adherence to Islamic law, where investments must not engage in activities that are considered haram (forbidden), such as those related to alcohol, gambling, pork, and interest-bearing financial services. Instead, Shari’a investment strategies promote assets that are deemed ethical and socially responsible, ensuring that financial activities align with moral values and religious principles. This creates a unique niche within the global investment universe, attracting both Muslim and non-Muslim investors who prioritize ethical standards without compromising on growth.

The collaboration between ASB Capital and SSGA is emblematic of a broader industry trend, as global investors increasingly incorporate ethical and sustainable practices into their portfolios. The fund’s focus on combining Shari’a compliance with a research-intensive, active management style speaks directly to the dual demand for both moral integrity and market performance. This dual mandate is especially pertinent in an era when investors seek to balance returns with responsibility—an approach that is being steadily normalized across asset classes worldwide.

Capitalizing on Global Market Trends

The global market is witnessing a steady shift toward sustainable and ethical investments, with the Shari’a compliant finance industry alone expected to surpass USD 3.5 trillion by 2025. This forecast reflects not only the rising influence of Islamic finance globally but also an increased appetite for investment products that reconcile conventional financial goals with ethical imperatives. As markets continue to integrate environmental, social, and governance (ESG) metrics into standard investment analysis, funds like this one play a pivotal role in bridging traditional strategies with forward-thinking approaches.

Hichem Djouhri, Senior Executive Officer at ASB Capital, highlighted that the fund is designed to unlock access to global markets for investors both within the region and beyond. “Our collaboration with State Street Global Advisors allows us to offer investors unique opportunities to diversify their portfolios across sectors and geographies,” he noted. By tapping into SSGA’s analytical prowess and decades-long experience, the new fund is poised to navigate the complexities of global equity markets while upholding Shari’a compliance—a rare feat in today’s dynamic financial environment.

Harnessing Global Expertise with Local Insights

State Street Global Advisors brings to the table a global reputation for excellence in active equity management. With extensive experience in managing portfolios that span multiple geographies and market segments, SSGA is uniquely positioned to contribute critical expertise to this collaboration. Emmanuel Laurina, Head of Middle East & Africa at SSGA, emphasized that the partnership effectively marries ASB Capital’s deep regional insight with SSGA’s global capabilities. This synergy ensures that the curated portfolio not only meets rigorous ethical standards but also embodies high conviction, quality investments that target sustainable long-term growth.

Michael Solecki, Chief Investment Officer for Active Fundamental Equities at SSGA, remarked on the strategic value of the partnership: “We are pleased to be collaborating with ASB Capital on this exciting opportunity, bringing our unique focus on quality, durable growth, and reasonable valuation to their platform.” Such statements underscore the commitment from both firms to deliver a product that is robust, forward-thinking, and aligned with the global trend towards integrated ethical investing.

Diving Deeper into the Fund’s Features

Global Diversity with a Focus on Quality

The fund’s structure is designed to capture the full breadth of global equity markets while maintaining a stringent filter for quality. By seeking investments in publicly listed companies that exhibit strong fundamentals and attractive valuations, the fund appeals to investors who are looking for both growth and risk-adjusted returns. At its core, the fund leverages the extensive research and analytical models that SSGA has refined over decades, enabling it to identify and focus on companies that are likely to deliver sustainable, long-term growth.

Integrating Shari’a Principles into Modern Investment Practices

Implementing Shari’a compliance in a global fund requires meticulous screening processes and constant engagement with both ethical and financial regulations. The fund’s investment universe is screened to exclude companies that do not meet the ethical thresholds dictated by Islamic finance. This involves a rigorous analysis of income sources, debt levels, and business practices. The criteria ensure that every investment not only contributes to overall portfolio performance but also adheres to the moral and ethical guidelines required by Shari’a law.

Leveraging the Confidence Quotient Framework

The Confidence Quotient Framework is a proprietary tool developed by SSGA that aids in evaluating the resilience and potential of different companies in varying market conditions. This framework incorporates multifaceted data, including traditional financial metrics and forward-looking indicators, to pinpoint companies with durable competitive advantages. For investors, this means that every equity selected for the fund has been thoroughly vetted to ensure it meets both investment and ethical criteria—a dual assurance rarely seen in conventional equity funds.

Robust Risk Management and Diversification Strategies

In today’s volatile markets, risk management and diversification are paramount. The fund is engineered to cater to investors across multiple risk profiles by offering a diversified investment portfolio spread across different sectors, geographies, and industries. This approach not only mitigates risk but also helps in capitalizing on growth opportunities in emerging markets and established economies alike. By integrating local market insights with global data, the fund is poised to respond agilely to changing market dynamics, ensuring that investor capital is well-protected even during periods of market uncertainty.

Ethical Investing in a Modern Context

Ethical investing is no longer a niche strategy; it has evolved into a mainstream investment philosophy. As societal values shift and investors become increasingly aware of the broader implications of their financial choices, products that blend financial returns with ethical values are emerging as key players in the asset management arena. This trend is underscored by the rapid expansion of ESG-focused products and initiatives that incorporate moral frameworks into their investment processes.

For many investors, especially in regions with significant Muslim populations, the integration of ethical guidelines through Shari’a compliance offers a sense of security and aligns investment practices with personal beliefs. However, even for non-Muslim investors, the appeal of ethical investments lies in their potential for long-term sustainability and resilience. By avoiding investments in industries with questionable ethical standards, the fund aligns with broader trends that favor social responsibility and sustainable growth.

Broader Market Implications and Future Outlook

The collaboration between ASB Capital and SSGA is being hailed as a transformative step that could set a new precedent in the industry. By successfully blending traditional investment strategies with the rigorous demands of Shari’a compliance, the new fund stands as an exemplar for future ethical investment vehicles. This could potentially spark increased interest from other asset managers to explore similar hybrid models, thereby expanding the range of investment options available to ethically minded investors around the globe.

Industry experts predict that as regulatory frameworks adapt to accommodate growing demands for ethical investment solutions, we may see further consolidation of global expertise and local insights across the asset management industry. The active management approach adopted in this fund, combined with its global diversification and ethical underpinnings, positions it well to capitalize on evolving market dynamics.

Moreover, the success of such funds may serve as a catalyst for enhancing transparency and accountability in investment practices. With investors increasingly scrutinizing the ethical and social implications of their portfolios, initiatives like this fund not only meet current market demands but also pave the way for a more ethically integrated financial ecosystem.

Regional Impact and the Role of the Dubai International Financial Centre

Dubai, long recognized as a global financial hub, plays a pivotal role in this initiative. The choice to domicile the fund in the Dubai International Financial Centre (DIFC) is strategic, leveraging the region’s sophisticated financial infrastructure and regulatory environment. The DIFC’s robust legal and regulatory framework offers a conducive environment for innovative financial products, particularly those that involve complex cross-border investments and ethical considerations.

The Dubai Financial Services Authority (DFSA), which regulates the fund, is renowned for its forward-thinking approach to financial regulation. This regulatory oversight ensures that the fund adheres to the highest standards of transparency, risk management, and ethical compliance, thereby bolstering investor confidence. For the region, the fund represents an opportunity to further integrate with global financial markets while showcasing the city’s role as a leader in pioneering financial products tailored to the modern investor.

Enhancing Investor Appeal Through Technological Integration

Technological advancements in the financial services sector have revolutionized how asset managers approach investment strategies and portfolio management. SSGA’s active management team has long been at the forefront of leveraging sophisticated data analytics, artificial intelligence, and machine learning algorithms to optimize investment decisions. These tools are integral to the Confidence Quotient Framework, which systematically analyzes vast amounts of financial and non-financial data to evaluate potential investments.

By incorporating these technological innovations, the fund is better positioned to identify market trends, forecast economic shifts, and adjust its portfolio dynamically. This proactive approach not only enhances the fund’s ability to generate strong long-term returns but also ensures that it remains agile in a rapidly changing global economic landscape. The seamless integration of technology and ethical investment principles offers a blueprint for future product development in an era where data-driven decision making is paramount.

Aligning with Evolving Global Financial Trends

The global economy is undergoing significant transformations, driven by factors such as technological disruption, climate change, and shifting geopolitical landscapes. Investors are becoming increasingly adept at recognizing that the traditional models of asset management must evolve to reflect these realities. The rising prominence of ESG investing, coupled with the demand for products that adhere to ethical principles, has catalyzed a rethinking of conventional portfolio strategies.

The ASB Capital and SSGA collaboration is timely, coming at a juncture when the world is more conscious than ever about sustainability and corporate responsibility. With global markets becoming progressively interconnected, investors are looking for funds that provide not only diversification but also a commitment to sustainable practices and ethical governance. This fund, with its dual focus on quality global equities and adherence to Shari’a principles, is well-positioned to serve this emerging investor segment.

Furthermore, the strategic alignment with Shari’a compliant principles responds to a broader conversation about sustainable growth. In many instances, investors argue that ethical practices and long-term financial success are not mutually exclusive. On the contrary, integrating ethical imperatives into investment processes can lead to more stable, resilient investment outcomes—a message that resonates widely in today’s market.

Voices from the Industry and Market Reception

The announcement of this new fund has been met with enthusiasm by industry analysts and market participants alike. Financial commentators have lauded the partnership as a forward-thinking initiative that not only addresses the growing demand for ethical investments but also leverages the strengths of two highly respected entities in asset management. Analysts point out that the combination of ASB Capital’s innovative approach and State Street Global Advisors’ global investment expertise creates a product that is both modern and aligned with core ethical values.

Investors have also expressed optimism about the fund’s potential to outperform traditional global equity vehicles while adhering to rigorous ethical standards. The prospect of accessing a diversified portfolio vetted through both conventional metrics and ethical filters is seen as particularly appealing in today’s complex financial landscape. The fund’s emphasis on quality, sustainable growth and its commitment to transparent risk management have contributed to a positive market sentiment, as investors increasingly seek assurance that their capital is being managed in line with broader ethical considerations.

Challenges and Opportunities in the Shari’a Compliant Market

While the fund’s launch signals a major milestone, industry experts acknowledge that operating within the constraints of Shari’a compliant investing presents unique challenges. The rigorous screening process, which involves excluding businesses not aligned with Islamic ethical guidelines, requires constant vigilance and adaptability. Additionally, global market volatility and emerging geopolitical uncertainties add layers of complexity to portfolio management.

Nevertheless, these challenges also present significant opportunities for asset managers who can skillfully navigate the regulatory, cultural, and economic landscapes. The growing body of research and technological innovation in asset management offers new tools and methodologies to overcome these hurdles. By continuously refining their investment strategies and leveraging real-time data analytics, fund managers can mitigate risks while identifying new avenues for growth. The current collaboration between ASB Capital and SSGA is a testament to the resilience and adaptability required to succeed in today’s intricate financial markets.

Future Prospects and the Road Ahead

Looking forward, the partnership between ASB Capital and State Street Global Advisors is expected to set a benchmark for future financial products that blend global equity strategies with ethical mandates. As regulatory frameworks around ethical investment continue to evolve, there is every reason to believe that additional innovative products will follow. This new fund not only broadens the spectrum of investment options available but also sends a clear message: ethical investing is not just a moral imperative but a strategic one that can yield strong financial returns.

The success of this fund could inspire similar collaborations between regional asset managers and global investment giants, further integrating ethical practices into mainstream asset management. As more investors recognize the value proposition offered by such hybrid funds, the industry could witness a paradigm shift—one where ethical considerations become an integral part of the investment decision-making process, rather than an afterthought.

In conclusion, the launch of the new global equity Shari’a compliant fund by ASB Capital in collaboration with State Street Global Advisors is much more than just a business maneuver; it represents a bold step toward a future where ethical imperatives and financial innovation go hand in hand. By harnessing global expertise, leveraging advanced analytical frameworks, and aligning itself with evolving market trends, the fund is poised to deliver robust, sustainable growth while staying true to its ethical commitments. As both firms continue to set new standards in the world of asset management, investors can look forward to a future where their portfolios not only generate returns but also contribute to a more ethically conscious global financial ecosystem.

This initiative serves as a powerful reminder that the future of investing lies at the intersection of technological innovation, global diversification, and a steadfast commitment to ethical principles. With ASB Capital and State Street Global Advisors leading the way, the path forward for ethical investment is one of growth, resilience, and unwavering dedication to integrity. As the global market continues to evolve, this fund stands as a beacon of the transformative potential of ethical finance—a journey where every investment is a step toward a more sustainable and responsible future.

The market’s reception of this fund is just the beginning. Over the coming months and years, investors and market observers alike will be closely watching the fund’s performance, anticipating that it will not only meet but exceed the benchmarks set by its predecessors. The integration of state-of-the-art research frameworks and a global perspective—combined with strict adherence to Shari’a guidelines—ensures that the fund is well-equipped to navigate the unpredictable tides of the global economy.

In a world where financial decisions increasingly reflect deeper societal values, the ASB Capital and State Street Global Advisors partnership is more than a business venture; it is a declaration that ethical investing can drive meaningful change without compromising on performance. As the fund embarks on this promising journey, it solidifies its position as a trailblazer in the realm of Shari’a compliant investments—one that harmonizes global market dynamics with the ethical imperatives of tomorrow.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

14th April, 2025