Islamic wealth management industry set to evolve with changing market trends

KUALA LUMPUR (May 16): The Islamic wealth management industry is poised to continue evolving in response to changing market needs and emerging trends, said Securities Commission Malaysia (SC) executive chairman Datuk Seri Dr Awang Adek Hussin.

Awang Adek said the industry must embrace innovation, while adhering to the highest standards of corporate governance and professionalism guided by Islamic values, to remain competitive and relevant in the present day’s environment.

“Practitioners of Islamic wealth management can harness the power of technology to optimise their services.

“By embracing digital solutions, practitioners can stay ahead of the curve and deliver greater value to their clients,” he said in his keynote address at the 11th Malaysian Financial Planning Council (MFPC) conference on shariah wealth management and financial planning here, on Thursday.

Awang Adek highlighted that mobile apps and online portals, developed by financial technology firms, can provide clients with comprehensive access to real investment portfolios, real-time market insights, and personalised financial advice.

He also noted that the SC had spearheaded efforts to strengthen the regulatory framework and facilitate innovation, to promote the growth of Islamic wealth management in Malaysia.

This includes the Islamic Wealth Management Blueprint, introduced in 2017, which outlines three strategic thrusts: strengthening Malaysia’s position as a global hub for Islamic finance; establishing the country as a regional centre for shariah-compliant sustainable and responsible investment (SRI), and developing it as an international provider of Islamic wealth management services.

“As a result, the blueprint has led to the introduction of frameworks and regulatory efforts to support innovation and further strengthen the market infrastructure for Islamic wealth management.

“This includes the revision of key frameworks and guidelines, such as the SRI sukuk framework in 2019, the shariah advisors guidelines in 2020, and the guidelines on Islamic fund management,” he added.

He noted that these efforts have significantly broadened the scope and sophistication of shariah-compliant investment products and services available in the market.

“Additionally, in our efforts to promote a greater value proposition aligned with the tenets of maqasid al-shariah, the SC introduced the waqf-featured fund framework in 2020.

“Under the framework, returns from the investment can be channelled back to charity in the form of cash waqf in various focus sectors, including health, community empowerment and education,” he said.

In 2022, the framework was further expanded to include Islamic real estate investment trusts (REITs) and Islamic exchange-traded funds (ETFs).

Awang Adek also highlighted that the index fund management sector saw commendable growth in Islamic assets under management (AUM), which rose to RM226 billion in 2023, constituting 22.7% of total industry AUM.

“The number of fund management companies operating shariah-compliant funds increased to 59 in 2023, from 53 in 2018, underpinned by an ecosystem characterised by strong intermediation and innovative product offerings,” he added.

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