Islamic funds and European regulation

Islamic funds are similar to conventional funds, to the extent that they share common objectives, such as pooling investors, preserving the capital and optimising the return. However, in contrast to conventional funds, Islamic funds must invest in conformity with Shariah principles. Islamic funds employ within their investment strategies non-financial investment criteria based on guidelines from Islamic law.While the industry of Islamic asset management is developing on the European market, Islamic funds as such, as well as, and their managers are not the subject of regulation dedicated thereto.They are therefore subject to regulation specific to collective investment funds of either European law or national law of the Member States, where the case may be. A specific private regulatory framework supplements, and thus compensates for the state’s religiously neutral regulatory framework.The regulation of Islamic funds is thus made through the provisions and recommendations that are born out of independent public and private standards. The non-binding character of the latter set of standards raises the question of the efficiency of the legal regulation of such funds.

Islamic funds and European regulation Keywords:

Islamic funds - European regulation , UCITS , AIFM , Private regulation , Faith-based funds - Eligibility of Shariah compliant instruments in a UCITS or AIFM context