The PFM Group, a UK-based financial services company, is to launch an open-ended Islamic equity fund with a capital of $25 million. The fund, registered in the British Virgin Islands, is to be called the Ibn Khaldoun International Equity Fund.

The fund is the latest in series of Islamic equity investment vehicles launched in the past year by Western institutions. It will invest in international. Islamic and Arab markets, PFM chairman Peter Green says.

The custodian for the fund will be Credit Suisse and the minimum subscription will be $15,000.

As with other sharia-compatible funds, interest earnings on the fund’s investments will be stripped out and paid to charity. The fund will also run a service for the distribution of zakat, or the Islamic religious tax paid to good causes.

PFM will manage the fund’s investments in-house. The company has a presence in Egypt, Qatar and Saudi Arabia through affiliates or management contracts to run local investment firms, and plans to expand this network during this year to include Jordan and Morocco (MEED 12:1:96).

The fund has a three-man sharia board to vet its investments. It comprises Mohammad Taqi Usmani, deputy chairman of the Islamic fiqh academy in Jeddah, Qatari university professor and Islamic law expert Ali Muheiddin al-Quradaghi and Abdul Sattar Abu Ghuddah, a member of the Jeddah academy who sits on the sharia boards of a number of Islamic banks and insurance companies. PFM says it is the second Western institution to set up its own sharia board, after London merchant bank Robert Fleming which launched its Oasis Islamic equity fund in February.

A large number of Islamic equity funds have been launched in the last year by Western or Gulf institutions, reflecting the demand of Muslim investors for higher returns than available on the traditional staples of Islamic investment, such as trade finance, and a softening of religious attitudes on investing in companies which pay or earn interest