Barclays Private Banking on 25 October launched an Islamic mutual fund called Barclays Islamic Portfolio (BIP) in response to demand from its private banking clients. 'The fund has been launched in the UAE where demand is particularly high. However, we expect it to attract interest from our clients throughout the Middle East region,' says Faranak Foroughi, Barclays' international private banking director in the UAE.

The open-ended fund participates in a $1,000 million pool of diversified, global equities compliant with sharia principles. Just under 60 per cent of the equities in which the fund will invest are US-based companies including Microsoft, IBM and Wal-Mart Stores. BIP's performance will be benchmarked using the MSCI World Companies Index adjusted to eliminate any companies that do not adhere to Islamic laws on investment.

Bank officials would not identify their investment adviser but said that it was a well-known institutional US equity fund manager which has over $1,000 million in sharia compliant assets under management. BIP's sharia committee is the National Management Consultancy Center from Jeddah.

Paul Rayner, Middle East regional director of Barclays Private Bank, said Barclays had been considering setting up an Islamic fund for some time, but that the move was precipitated by interest from the UAE press. He added that the different benchmark and the rigorous and research-driven investment process were among the factors differentiating BIP from other Islamic funds.