Asset managers are well positioned to capture a share of the responsible Islamic investment markets worth over $23 billion should Canada position itself as a hub, according to a new study.
Thomson Reuters and the Toronto Financial Services Alliance teamed up to investigate Islamic finance investment opportunities in Canada.
Their report, the Canada Islamic Finance Outlook 2016, found that there is almost $18b in potential Shariah-compliant mortgages available to support Canada’s Islamic banking development and, as a result, Canadian asset managers could take home a significant share of the investments.
As experts in Canadian investments and money management, many Islamic and foreign investors may seek ‘on the ground’ insight, especially from those with international experience in responsible finance and Shariah compliant investment space.
This means, should Canada further its status as the Islamic financial hub of North America, advisors may be in further demand and that positions them well to capture a share of the new investments.
"Canada's commercial ties with the countries of the OIC are growing fast. Canada is keen to explore ways to forge new partnerships and to create new opportunities for long-term, collective prosperity both in Canada and in the Muslim world,” said H.E. Arif Z Lalani, Canada's special envoy to the organization of Islamic Cooperation (OIC) and current ambassador of Canada to the United Arab Emirates.
The fact that Canada has, what is considered one of the most effective and safest banking systems in the world, according to the World Economic Forum, and has a larger Muslim population than that of America, means the country is ready to compete to become the larger Islamic investment area of North America.
As it stands, the growing domestic Muslim population is estimated at over 1.3 million in Canada. This is expected to rise to 3 million by 2030, meaning that Muslims will eventually make up 6.6% of the population.
Currently, there is a potential of over $2 billion in Shariah-compliant mortgages in Canada. That figure is expected to rise to $18 billion in the next five years bringing with it new investment opportunities and work for advisors.
"Canada and Toronto have all the ingredients to become a North American hub for Islamic finance- a sound economy and stable political environment; a wealth of assets that are conducive to Islamic finance; traditionally strong risk management skills; a large and growing Muslim population; an openness to doing business with the world; and an effective regime of regulation and supervision," said Janet Ecker, president and CEO of Toronto Financial Services Alliance.