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18.5.09

Islamic Hedge Funds: Hedging or Speculating?

RAM in the March 2009 issue of Islamic Finance Bulletin discuss, among the other interesting articles, the prospects, shariah-compliance and adherence to maqasid for Islamic Hedge Funds.

Free registration is necessary on their site before being able to download copies of Islamic Finance Bulletin. It is worth perusing as there seem to be quite a few interesting and relevant articles in the archives.
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1 comment:

  1. Definitely worth the web registration! The article needs some fresh statistics but I liked its methodical approach, there isn’t much of a conclusion but actually raises more question marks! I thought it would be worth raising a few points (from the conventional perspective):

    - Hedge funds are not meant as a hedge, but to provide uncorrelated returns (to other asset classes such as equity, bond and commodity markets). I would defend this economic function (and note that it is not exclusive to hedge funds) – but not at the expense of Shariah principles.

    - The uncorrelated concept is not addressed anywhere in the article – reason being that “classical” hedge funds are VERY rare and the marketplace is now flooded with “pseudo” hedge funds (i.e. expensive mutual funds), that offer highly directional investments (i.e. NOT hedge funds) under a 2 and 20 price tag. Huge amount of data to support this.

    - A correction, the Swiss Asia product is NOT a hedge fund, I guess sometimes anything with an “alternative” or “absolute” label is automatically assumed to be a hedge fund….

    - A correction – as far as I know the Algo AlQayyim product never launched, it was at the conceptual stage but please if anyone can enlighten me here please do so! I have been wrong before!

    - A clarification, the Alkhawarizmi and the Allfanar products are both now defunct, a significant detail! There are at least two other defunct Islamic hedge funds not mentioned (graveyard analysis is VERY important!).

    Regards

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