Dubai seeds Sharia-compliant hedge funds

The government-owned Dubai Sharia Asset Management (DSAM) on Tuesday launched five Sharia-compliant hedge funds with US$200 million (Dh734.6m) in government seed money. DSAM also offers a platform for third parties seeking to launch their own Sharia-compliant hedge funds. "No other Shariah-compliant platform has ever been endorsed by a government," said Eric Meyer, the chief executive of Shariah Capital, a US investment company that owns 49 per cent of DSAM. The Dubai Multi Commodities Centre Authority (DMCCA), which provided the seed money, owns the remaining 51 per cent. "If there is business to be had... and our managers continue to outperform conventional managers and long-only Sharia-compliant hedge funds, we can get the lion's share of Sharia investments," Mr Meyer said. The funds, which do not allow leverage, options or synthetic products, opened to investors yesterday. Mr Meyer's enthusiasm to attract funds contrasts with the experience of competitors, who see little demand for Sharia-compliant hedge funds. Deutsche Bank's sharia-compliant hedge fund platform, launched last year, has received no market interest, bankers say. uharnischfeger@thenational.ae