Sweden: Sharia fund not attracting customers

Sweden: Sharia fund not attracting customers

Two years ago Swedish banks checked the issues of Islamic finance and discovered Swedish Muslims aren't interested.  One bank started up a fund anyway and is now discovering that it doesn't have so many customers.


The first Sharia fund in Sweden was launched last August.  Avanza Bank introduced the fund to its customers.  But since then success failed to materialize.  Only twelve customers saved in total 40,000 kroner in the fund. 

"That so few of the country's 300,000 Muslims came to the fund must be disappointing.  Now, not all people are interested in saving, but 10-20 percent of them should have come to the fund within several years," says Claes Hemberg, spokesperson for Avanza Bank.

He thinks that the poor result isn't only due to mistrust of the fund or to fund ethics on the whole.  It's rather that the trouble with the stock market in the recent half year had made Muslim associations and the Selector fund management company push off further investment, and many Muslims don't know about the fund.

He says that he's offered several times to visit mosques to teach and explain the basics of saving in a fund, but the plans have been pushed off till now.  Now that the stock markets worldwide are unstable, the issue is more actual than ever.  But it would take several quarters for the customers to understand the possibilities.

But beyond the very lukewarm interest from the customers of Avanza Bank, anybody who wants to could choose the fund for their PMM (pension) fund.  The Selector fund management company, which offers the fund in Sweden, is seeing a positive reception.

"We launched the product just before the ongoing financial crisis and were delighted to note a monthly net inflow since then," says Lotta Westerberg, Selector's representative in Sweden.

The fund, which is called Selector world shariah value, is a global fund, with 100 companies from all over the world.  On the basis of Islamic criteria, the companies are chosen by the Dow Jones Sharia council, which is made up of five imams from various countries.  The companies don't deal with weapons, alcohol or pornography.  They also don't deal with banks or other financial institutions since interest is forbidden according to the Koran.

"We know there's a big group which represents about 5% of the Swedish populations, which didn't have any investment possibilities in accordance with their faith in the past.  And we estimate that the market will continue to grow," thinks Lotta Westerberg.

But Abdallah Salah, president of the Islamic Association of Stockholm, thinks that the fund won't grow as long as Islamic associations and unions do not market it.

Salah says that people know about the fund, but don't understand it enough.  "We never recommended or marketed the fund, and therefore it's not popular, either.  Today we don't have good cooperation with the fund's owners, and in order to advance, we must investigate whether the fund really follows sharia law, and that requires much greater resources than we have," he says.

Source: SVD (Sweden)

See also:
* Sweden: First Sharia fund
* Sweden: No interest in Islamic banking

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