The number of sharia-acceptable equity funds is set to grow over the next few weeks with Bahrain-based TAIB Bank and Germany's Commerzbank both preparing to launch new vehicles.

It is understood that the TAIB Crescent Global Fund will be launched by mid-December, but that strong marketing will commence after Ramadan. 'It is an open-ended fund, and we've not set a target for how large we expect it to grow,' says a TAIB official. 'The bigger it gets the better.' He says the first phase of marketing for the fund will focus on GCC markets.

The Crescent Global Fund will have the Dow Jones Islamic Markets (DJIM) index as its benchmark, and the goal of the fund is to outperform it through investment in global equities.

Commerzbank's vehicle, the Al Sukoor European Equity Fund, is to be launched in January, and will be the first sharia-compliant fund exclusively investing in European equities. 'We have extensive experience of institutional clients in the Middle East and this has shown a growing demand for European equities among investors who want Islamic investment,' says a Commerzbank official. 'We are aiming to raise about Eur 100 million [$101 million] in the first 12 months.'

Marketing for the AlSukoor fund will open after Ramadan in the Middle East, but plans have already been drawn up to offer it to Commerzbank's Muslim retail customers in Germany, mainly the sizeable Turkish community.

The fund will be offered by Commerzbank's asset management group, Commerz International Capital Management (CICM). Saudi Arabia's Al-Tawfeek Company for Investment Funds, part of the Dallah Albaraka Group, will serve as distributor, and will be responsible for screening the acceptability of investments, along with the fund's independent sharia board.

These two funds are the latest additions to the rapidly expanding universe of Islamic equity funds, and follow on the heels of recent announcements of launches by Banque Nationale de Paris and Barclays Private Banking (MEED 3:12:99; 5:11:99). Analysts say the Islamic equities market is growing by more than25 per cent a year, and estimate the total volume of assets invested according to Islamic principles exceed $100,000 million.