Shari’ah-Compliant Australian Equity Fund Approved by Bahrain Authorities

By: Staff Writer, CPI Financial

The Central Bank of Bahrain has authorised formation and marketing of the Hyperion Australian Equity Islamic Fund, the first Shari’ah-compliant offshore fund comprised of the country’s stocks.

Investment manager for the fund is Hyperion Asset Management, a Brisbane-based, growth-style manager whose award-winning core investment team has worked together since 1997. Shari’ah advisors to the fund are Dr. Mohd Daud Bakar of Malaysia and Sheikh Nizam Yaquby of Bahrain.

The fund is available for “expert” investors, defined by Bahrain authorities as individuals and institutions that have at least $100,000 in financial assets, as well as governments and related organisations. The fund is managed in Australian dollars and reported in US dollars.

Hyperion uses a proprietary process to manage a high-conviction portfolio made up of a limited set of stocks that meet strict selection criteria, for Shari’ah-compliance and other business attributes. The firm has earned a host of recent recognition for outstanding performance. Accolades include being named Australian Equities (Small Cap) Fund Manager of the Year at the May 2010 Money Management/Lonsec Fund Awards and winning the Golden Calf Award for Best Emerging Fund Manager at the October 2009 Australian Fund Manager Awards.

“Since we emphasise cash flow and low debt ratios in evaluating companies, our transition to Islamic investment discipline has been streamlined,” said Dr. Emmanuel (Manny) Pohl, CEO and Managing Director of Hyperion Asset Management.

“Hyperion’s investment ethic aligns rather naturally with principles of Shari’ah-compliant investing. We have never used leverage or derivatives in our core strategy.”

“In the post-recession era, Australia stands out among the major markets, in part because of the country’s conservative fiscal stance,” said Douglas Clark Johnson, CEO of Codexa Capital, which consulted on fund structuring and marketing, and represents the product in selected markets.

“One way of viewing Australia is as a China play with more regulation and transparency, because of its strong export exposure to the world’s second largest economy.”The Australian stock market is the second largest in Asia outside Japan, exceeding either China or India. Unlike many developed nations, Australian avoided recession during the global financial crisis. The nation is expected to sustain three per cent to four per cent annual GDP growth over the next several years.

“We selected Bahrain as the jurisdiction for the fund because we believe the Central Bank’s role provides an additional degree of comfort for investors,” said Johnson. “Meeting Bahrain requirements enhances transparency and integrity at a time when these attributes have taken on much greater importance. Bahrain contrasts with some other offshore jurisdictions that provide little or no oversight for the investor.”

“We are delighted to welcome the Hyperion Australian Equity Islamic Fund to Bahrain,” said Shaikh Mohammed bin Essa Al Khalifa, Chief Executive of Bahrain’s Economic Development Board. “This reflects the growing international appeal of Islamic finance, an ethical investment sector that has drawn interest beyond Muslim countries.”

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