DEAL: world’s first sukuk ESG equity fund

Author: Karry Lai | Published: 11 Sep 2018

The world’s first environmental, social and governance (ESG) sukuk fund will rely on strict screening to ensure the fund investments are shariah-compliant. But limited data available on some targets could prove a challenge.

Malaysia-based BIMB Investment’s BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund will invest in around 100 local shariah-compliant listed companies. It is targeting a close of RM100 million ($24.1 million).

The fund is denominated in Malaysian ringgit, and US and Singapore dollars
Using ESG guidelines set out by the UN Global Compact and Arabesque Asset Management’s credit rating assessment, the fund's strategy is to incorporate ESG criteria into the portfolio. A five percent coupon rate is expected.

“The challenge with the fund is in obtaining the ESG data on issuers,” said Najmuddin Mohd Lutfi, chief executive of BIMB Investment. “There is limited data for a complete assessment to balance out the ESG and sukuk...