The London-based Bank of London and the Middle East has confirmed the launch of its Shariah Dollar Income Fund.

The fund represents the largest Shariah-compliant money market fund in Europe, said the bank. The Luxembourg-based fund currently stands at over £50 million ($82 million).

The fund invests in Islamic money market instruments, Sukuk, an Islamic bond, and Ijara, the leasing of assets, the firm said in its statement.

“The BLME Shariah Dollar Income Fund has been launched in response to the demand we have seen in the marketplace for a Shariah compliant product which can provide investors with a consistent income stream, while maintaining a strong focus on liquidity, capital preservation and robust risk management,” said Nigel Denison, head of asset management at BLME.

The fund, which will be managed by Jason Kabel, has a Shariah supervisory board to make sure that it remains Shariah-compliant.

“The launch of this fund is a major opportunity to respond to the demands of the growing Islamic investment market in Europe, where there is currently a dearth of products. We believe that this fund is a positive initial step in innovating Shariah-compliant investing in Europe,” said Mr Kabel.

Islamic finance aims to create business activities that generate a fair and equitable profit from transactions that are backed by real assets. This method of financing avoids speculation, short selling and excessive credit creation whilst encouraging sound risk management procedures, BLME said.

Shariah-compliant products and financial instruments have become more widespread in recent years, driven by growing wealth in the Middle East and among Muslims around the world.