IN THE SPOTLIGHT
An Interview with Anouar Adham, QIB (UK)
01 January, 2012
London based QIB (UK) is a subsidiary of Qatar Islamic Bank, one of the oldest and largest Islamic banks. When we interviewed Anouar Adham, Head of Asset Management at QIB (UK) towards the end of 2011 we were interested to pick up on some of the themes that had emerged from our article on Islamic asset management in the October to December 2011 issue of NewHorizon, as well to examine more closely one of the financial institutions covered in this quarter’s focus on Qatar.
Anouar Adham has extensive experience with international banks in Europe, South East Asia and the Middle East. His experience includes investment, finance, development, asset management and advisory for HNWI (High Net Worth Individuals). He was formerly with Qatar Islamic Bank where he was a senior banker and was involved in real estate projects, industrial development and corporate advisory. He is a Chartered Financial Analyst (CFA), has a Master’s degree in Finance from the University of Clermont-Ferrand in France and holds the Islamic Finance Qualification.
In terms of geographical spread where do QIB's clients come from and do you expect this situation to change?
QIB (UK)’s clients are spread globally but with most of the client coming from the MENA region. In the future we expect the GCC to stay as our main core market with central Asia as well as south East Asia showing great potential.
Does the Islamic asset management industry in general and QIB (UK) in particular largely serve HNWIs (High Net Worth Individuals) rather than institutions such as pension funds? How is this situation changing and how is QIB UK playing a part in that change?
Actually, our focus so far has been on institutional clients, especially takaful and retakaful operators. In 2012 we will continue to serve institutional investors but we were also looking at the opportunity to target HNWIs via our Wealth Management Platform. Over the last couple of years we have seen most of the Islamic asset managers starting to work on an HNWI strategy. I think that one of the main reasons is that Islamic banks are focusing more and more on serving private banking clients as they need to find a substitute for falling revenues in their investment banking activities.
One criticism that has been levelled against the Islamic asset management sector is that it has been too reliant on real estate in its portfolios. Is this a reasonable criticism; does QIB UK strive to follow the principles of modern portfolio management and is it in any way hampered by the absence of a strong secondary market in Sukuk, for example?
For a long period of time Islamic asset managers focused on real estate fund for the simple reason that this is what clients wanted and the real estate market was booming globally making it an attractive asset class. Investors, however, have seen during the crisis that real estate prices could also go down and that a diversified portfolio has its advantages, one of which is to reduce systemic risk. QIB (UK) Asset Management’s first product was a global sukuk fund, that was launched almost three years ago with US$30 million and is today close to US$175 million, making it the biggest sukuk fund in the market. We launched this fund because we had identified the need for income generating products outside the real estate space. Initially the secondary market was an issue and we just had to work with that, but today most of the high quality paper in which we invest (the average rating of the fund is A) is liquid.
We are also managing an investment plan in Qatar called Themar that invests in sukuk as well as the equity of Islamic financial institutions globally. This product, by investing globally in different asset classes, offers a great diversification to our customers via a single product.
To summarise, real estate has been and still is an asset class that Sharia'ah compliant investors are exposed to but the level of investment is being reduced progressively.
Have the dangers of real estate investment been exaggerated; are investors too influenced by events such as the bursting of the Dubai real estate bubble?
Investment exposure in any one single asset class is dangerous. Investors should always look at diversifying their investment positions and discuss dynamic asset allocations that fit their risk profile with their investment adviser.
Given the current economic climate and the level of mistrust in many conventional financial organisations, are you seeing an increased interest in Islamic asset management from non-Islamic institutional investors?
You have some non-Islamic institutional investors that are looking to invest in Shari'ah compliant products; however you cannot really identify a real trend of money flowing out the conventional products to be invested in Shari'ah compliant products.
Do you market your asset management products only to Muslim investors or do you also try to attract clients from the ethical finance sector or more widely?
We do not build our strategy by segregating Islamic and non-Islamic investors. We structure products to be competitive in the global market and to answer clients’ needs.
How would you differentiate Islamic asset management products from those of the ethical finance sector?
Islamic finance is part of the ethical/SRI (Socially Responsible Investment) sector as they share the common value of being a positive factor for society. I think that the main difference between Islamic finance and other forms of ethical finance is the use of ‘haram’ financial instruments such as derivatives and riba based products.