With the emergence and subsequent growth of Islamic banking and finance, Islamic wealth management (IWM) is today no longer an unfamiliar concept. The global wealth management market is expected to grow at a compounded annual growth rate (CAGR) of 8.7 percent in 2021 to $1.26 trillion. However, the development of IWM options is broadly speaking, still at a very early stage.
The trend towards embracing alternative investment options will continue; the key factors driving this growth include the rising population of both retirees and high net-worth individuals (HNWI) who require higher returns than what is possible in today’s low interest rate environments. More notably, the demand is expected to rise at a rate of 9.8 percent per year to 2025, when alternative assets under management (AUM) are predicted to total $17.2 trillion.
With ethical and socially responsible funds broadening their appeal to investors, IWM options have also come into prominence in this area. As the first part of a series, this article aims to differentiate the conventional forms of wealth management and explore the potential of Islamic finance as an impactful wealth management solution.
For information about how Capco can help you harness the potential of Islamic finance as an impactful wealth management solution, please contact:
Partner, Regulatory Consulting
Principal Consultant, Islamic Finance Lead