The alternatives unit of New York-based Gabelli Asset Management is launching a Shariah-compliant hedge fund, Gabelli Shariah Merger-Arbitra...

The alternatives unit of New York-based Gabelli Asset Management is launching a Shariah-compliant hedge fund, Gabelli Shariah Merger-Arbitrage Fund, to cater for the growing wealth in the Middle East market. As a Shariah-compliant fund, the hedge fund, which will not be allowed to invest in banks and insurance companies as charging interest is banned under Islamic law, is a natural extension to his firm's socially responsible funds, which cater to Western faith-based organisations. According to Frederick Scholz, president of Gabelli's alternative investments unit, the launch is part of a growing trend in the Middle East. Many institutions, including Saudi Arabia's National Commercial Bank and National Bank of Dubai, have recently moved to stricter provisions and can now invest only in Shariah-compliant vehicles, he said. For the new fund Gabelli is using software developed by Shariah Capital, that screens out non-compliant companies with guidance from Islamic scholars.