Cape Town-based Oasis Group Holdings is the pioneer of Shariah-compliant asset management, retirement and investment fund products - both equity and property funds and REITs - in South Africa since it launched its first Islamic fund in August 1998, the Oasis Crescent Global Equity Fund. Over the last few years, the group has ventured abroad and now aims to build the first global Shariah-investment fund brand, complete with a global distribution capability and a global asset management capacity. By end June 2011, the Oasis family of Shariah-compliant funds under its "Crescent" label, totaled 19 funds comprising equity based mutual funds, retirement funds, property funds and REITs (real estate investment trusts).
Last week the group announced that it is in the process of opening an office in London to spearhead its operations in the UK and EU market, which as a Muslim population of 2.8 million and 12 million respectively. This move is part of its ambitious expansion strategy which in the past has included selective and limited forays into Malaysia and Dubai, and according to Michael Bear, the Lord Mayor of the City of London, "will benefit both South Africa and London.
Last month the group celebrated the 13th birthday of its flagship domestic funds, the Oasis Crescent Equity Fund which was launched on Aug. 1, 1998. The fund has now grown to just under R4.5 billion in size and has produced a cumulative return of 1505.6 percent for its investors and an annualized return of 24 percent since inception, which is well in excess of the average domestic Shariah general equity fund. Similarly, The Oasis Crescent Global Equity Fund, is one of the top performing global equity funds which according to the group, has given investors an annualized return of 7.7 percent and a cumulative return of 120.8 percent since it was launched in December 2000, once again outperforming the average Shariah global equity peer group by far especially in a difficult global investment environment over the last few years. Today the Oasis Crescent Global Equity Fund has a respectable fund size of $142.1 million which is well above the average of about $50 million for Islamic equity funds. In June this year another fund, Oasis Crescent Retirement Fund, South Africa's first Shariah Compliant Retirement Fund, celebrated its 10th anniversary and has provided annualized returns since inception of 14 percent for clients.
The prime mover behind the Oasis Group's success and ambitious expansion strategy is Adam Ismail Ebrahim, CEO, Oasis Group Holdings, who has more than two decades of experience in the asset and fund management industry, especially with the Old Mutual Group, where he started his career. Here Adam Ebrahim discusses with Arab News the rationale behind the Oasis expansion into the UK and Europe, and the challenges for the Islamic fund and investment management industry going forward.
Excerpts:
What is the rationale for Oasis opening an office in London and expanding to Europe?
Over the past 14 years, Oasis has established itself as a prominent global investment manager and a leading provider of Islamic financial services products. Many conventional investment vehicles available in the UK and EU are heavily invested in the alcohol, gambling, interest-bearing and pork sectors.
Unfortunately, this means that many Muslims, through no fault of their own, are rendering significant portions of their hard-earned Halaal income Haraam.
Oasis can offer these investors comprehensive and Shariah compliant investment alternatives. After the success of our established investment processes and philosophy in South Africa under a regulatory and transparent environment, we now plan to directly serve the retail and institutional clients in the UK and are in the process of setting up a physical office in the London region to provide high-quality professional financial advice and asset management services.
Oasis is well placed to enter the UK financial market with the requisite skills, administration systems and internal capacity. We provide the full range of Islamic Funds which are regulated under UCITS and therefore already meet the highest regulatory standards in Europe. The UK has a similar regulatory framework and tax structures as South Africa. We are well-positioned in that we have already been operating in the European market for more than ten years and this aspect of the business is managed by the Irish arm of our business, Oasis Global Management Company, which is regulated by an established EU regulatory framework.
We remain committed to our clients and the markets that we serve and our aim is to ensure that their investment is not only well protected, but that they are able to realize real and tangible improvements in the quality of their lives through their investment with us.
Although Europe has a Muslim population of over 14 million people, Islamic investments funds including equities aimed at the retail and high net worth sector have not fared well in this market for various reasons especially because of inadequate marketing strategies and lack of products. How confident are you that Oasis has the right approach; the right suite of products and also is committed to developing the UK and EU market?
While the UK is a leading financial hub of the world, there is scope to broaden the investment product range available to investors and through its physical presence in the UK, Oasis intends to provide a deeper offering, which will reinforce London as a financial hub.
We have an impressive performance track record across a range of investment products both globally and in South Africa. Over the long-term, this has created real wealth for our investors and has outperformed the average conventional peer investment products. Oasis has put in a lot of effort to educate investors and direct them to the correct path when it comes to investing their savings in not only ethical investment instruments but also inflation beating assets that will significantly grow their real wealth. Oasis products that are well established in South Africa are structured to meet the needs of our clients from the cradle to the grave.
Our investment product range covers the full spectrum of investment objectives and needs of investors - through balanced funds, equity funds, property funds and income funds. And our approach is a life stage approach that caters to different client life stages and different risk profiles. For example, investors aged between 20 and 50 are in the wealth generation stage of their investor lifecycle. They have longer investment time horizons and can therefore afford to maximize their returns by taking comparatively higher risk on higher equity exposures. This relatively high tolerance for risk classifies these individuals as aggressive investors seeking high growth opportunities. Higher equity exposure (75 percent), a decent property component (12 percent) and smaller income exposure of 18 percent (split between bonds at 11 percent and cash at 7 percent) is best suited in the make-up of these investment portfolios. Investors aged between 50 and 60, on the other hand, have reached the stabilization phase of their investor lifecycle. They still have some time to invest but are nearing retirement and should therefore start being more conservative by holding moderate equity exposure in their investment portfolios.
The portfolios of these moderate investors would ideally have reduced equity exposure (to about 64 percent), with increased exposure to property (23 percent) and income (13 percent). This moderates risk but also moderates returns. The Oasis Group already has a global client base, including institutional clients, that has been serviced through international and regional wealth platforms and which can now be serviced directly in the UK through our London presence.
Shariah-compliant funds that are already available in the UK include the Oasis Crescent Global Low Equity Balanced Fund, Oasis Crescent Global Equity Fund, the Oasis Crescent Global Property Equity Fund and the Oasis Crescent Global Income Fund. These funds are European-based, domiciled in Dublin and are also subject to review by an independent Shariah Advisory Board consisting of renowned Islamic scholars.
We are therefore quite confident that the response from the population from the UK will be positive as the investors have lacked solid investment opportunities that can generate wealth and meet their moral and ethical principles.
Will Oasis be looking to passport its products to the rest of the EU markets? If so which are the target markets in the EU other than the UK? Are you planning any new products specifically aimed at this market?
From a global perspective, the UK is a leading financial hub. This is why we have chosen to establish South Africa and the UK as our "home markets", apart from our third party distribution services already available internationally. Our London offices will enable us to service our European client base quite effectively via a direct distribution model. In the future, we may possibly look at attractive opportunities in other European markets.
The latest development on the global product range has been the launch of Oasis Crescent Global Low Equity Balanced Fund in April 2011. Providing exposure to a combination of high-quality global equity, property and income, this fund marks the first in a series of balanced funds to be rolled out in expanding our global product range over the coming months. The objective of this new fund is to achieve medium to long-term capital growth and income generation by investing in global securities that are ethical and Shariah-compliant.
By investing in several different asset classes, this fund is diversified and therefore reduces risk for investors. Designed according to the Oasis philosophy of matching risk/return profiles to an individual investor's age, risk appetite and investment time horizon, this fund caters to any investor who is looking for a relatively low risk investment that will beat inflation over the long term.
What is your outlook for the Islamic investment funds, equities and asset management sectors going forward? Is the market recovered after the financial crisis in 2008 or will it take some time for pre-crisis confidence and exuberance to return?
Islamic finance and investments are largely equity based and include underlying assets where financial transactions are involved. The use of debt is discouraged with a focus instead on risk sharing and profit generation. This approach cuts out any speculative activity, making investments less risky for investors and giving them a strong investment base in difficult economic environments. There is greater stability because investing according to Islamic principles means that there is no encouragement of gearing or thoughtless speculation. The low risk and socially responsible approach of Islamic investment combined with competitive returns has led to an increasing number of non-Muslim investors worldwide taking up Shariah-compliant investments in recent years.
The 2008 financial crisis was brought about by speculative activity and increased investment in risky assets not backed by tangible instruments. Greed and fear led to the rise and fall of these risky assets and consequently a rise and fall in financial markets. The sovereign debt crisis in the developed countries or what we call the "troubled world" has lead to fear among investors.
However, on the other hand, emerging markets or what we call the "growing world" are showing good growth and are likely to continue to show robust growth over the next few years. There are significant opportunities to invest in high quality companies that are global players with strong balance sheets, sustainable income streams going forward and global brands. These companies are able to withstand tough economic environments and when the dust settles will emerge stronger and with an increased market share. Our portfolios are well positioned for the current environment allowing us to invest in companies such as Microsoft (United States) and Vodafone (UK) which are currently offering great value for long term investors.
© Arab News 2011
