A lack of diversity in their investments could mean Islamic asset managers lose out to conventional firms, a report published last week said.Accounting firm Ernst & Young said Muslim investors hold $1.6 trillion in assets of all kinds, a figure forecast to rise to $2.7 trillion by 2010.
Islamic funds, which invest in accordance with Islamic law, ignore important asset classes and in Saudi Arabia, one of the world's two biggest markets for Islamic asset management, fund subscriptions have fallen since 2005, the report said.
"As demand for diversification grows, Islamic institutions will face the risk of losing significant market share to conventional institutions that can provide more comprehensive coverage," Ernst & Young said in the report.
By the end of March there were more than 500 funds globally that comply with Islamic law, Ernst & Young said in its Islamic Funds and Investments report, launched at a two-day Islamic banking conference that ended last Monday.
Some 153 Islamic funds were launched last year, and the figure is projected to rise to 1,000 funds by 2010, Ernst & Young said.
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