Crescent Wealth, an Australian wealth manager working under Islamic guidelines, has partnered with Bank of London and the Middle East in a deal that gives Australian retail investors exposure to the Islamic bonds market.

Among the benefits of the agreement, Crescent Wealth said, is that investors in the Crescent Islamic Cash Management Fund will gain exposure to the global market for Sukuk, or Shariah-compliant bonds, estimated to be worth a total of $150 billion or more. The portfolio will be managed by BLME, according to a statement from the firms.

“Our partnership with BLME, Europe’s largest Islamic bank, is significant because it is further evidence that Australia is being taken seriously as a viable growth market for Islamic funds management,” Crescent Wealth founder and managing director, Talal Yassine, said.

“The partnership rounds out Crescent Wealth’s Shariah-compliant product suite by adding a fixed income option to our existing Australian and global equities, property and cash offering,” he added.

Nigel Denison, head of wealth management at BLME, said: “Recently we have seen increased demand from international investors for Sukuk because of good credit performance that has proven Sukuk to be resilient to the global economic downturn. The strong performance of our fixed income products has been supported by a buoyant Sukuk market, with 2012 looking to be a record year both in terms of our product performance and for the Sukuk market overall.”

The announcement comes at a time when the market for Shariah-compliant products – they prohibit charging of interest, among other features – has been growing, driven by developments such as oil wealth in the Middle East and the rise of an affluent Muslim middle class in countries such as Indonesia.

Global Islamic banking assets exceed $1 trillion and are forecast to grow to $2 trillion by 2017 (Source: HSBC Amanah Global Sukuk Market: Current Status and Growth Potential, 18 May 2012). In addition, there is an estimated $58 billion in managed funds invested in Shariah-compliant equities.

Established in 2010, Crescent Wealth has an Australian equities fund and a cash management fund. An international equities fund and property fund will be launched later this year, which will together make up Australia’s first Islamic superannuation option, the firm said. Yassine says his firm is tapping the significant potential for Islamic funds in Australia, estimated to grow to as much as AUD$22 billion in funds under management by 2020.