Fitch Ratings: European Islamic Funds Industry Led by Luxembourg

Fitch Ratings expects the Luxembourg Islamic Mutual Funds Industry’s (MFI) strong growth momentum will continue in the short to medium term, supported by the government’s continuous promotion of Luxembourg as a Western hub for Islamic finance and as an international financial centre in general. The country’s favourable regulatory, legal and tax framework supports the set-up, administration and cross-border distribution of Islamic funds and augments its growth.

Luxembourg is leading the European Islamic fund industry, with 30 sharia-compliant funds by end-3Q21, composed of mainly mutual funds. In contrast, Ireland has 16 Islamic funds, consisting of both mutual funds and Exchange Traded Funds (ETF), and the UK has about five funds, mainly pension funds. At end-3Q21, Luxembourg was also ahead of Jersey (13 active Islamic funds, mostly ETF instruments) and the Cayman Islands (10 mutual funds). The Islamic MFI in Luxembourg has grown by 122% over the past six years, with total assets under management (AUM) of USD6.7 billion by end-3Q21, making Luxembourg among the top-five countries in this segment globally.\