NBK launches its first Islamic leasing fund

National Bank of Kuwait (NBK), the largest commercial bank in Kuwait, launched today its first Ijara (Islamic Leasing) Fund, offering investors a steady and monthly income that complies with the Islamic Shariah without taking excessive risk.

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By  Massoud Derhally Published  February 11, 2002

National Bank of Kuwait (NBK), the largest commercial bank in Kuwait, launched today its first Ijara (Islamic Leasing) Fund, offering investors a steady and monthly income that complies with the Islamic Shariah without taking excessive risk.

Issam Al-Sager, Deputy CEO of NBK, stated in a press conference that Al Kawthar Ijara Fund’s main objective is to provide investors with reliable and attractive monthly returns. This is achieved by participating in the Fixed Income Ijara Fund, which invests selectively in Ijara transactions that satisfy the requirements of the Islamic Shariah. The Fund is expected to provide investors with a yield of around 6% on an annual basis. Ijara or Islamic leasing is probably one of the fastest growing activity of Islamic financial institutions.

Al-Sager emphasized the following features of the Fund: Regular and attractive returns by investing in Ijara transactions with credit-worthy U.S. companies, mostly “Fortune 1000” Companies that satisfy the requirements of Shariah; the equipment portfolio will also be diverse as to lessees and equipment types, and making the Fund a low-risk investment vehicle. Finally, a Shariah Board, headed by Dr. Mohamed El-Gari, one of the leading Shariah advisors, to ensure its Shariah compliance, will review the Fund’s structure and operations annually.

Al-Sager also commented that “the securities markets are increasingly following the same trends worldwide. Therefore, to optimally diversify a portfolio, it is no longer enough to distribute your investments only across different stock markets. In this environment, Islamic leasing “Ijara” funds are becoming an ideal diversifying investment opportunity.” Furthermore, he added, “owing to the complexity of the subject matter, it is virtually impossible for an individual investor to acquire an objective overview of the US leasing market as a whole. The most intelligent alternative for participating in this fast and growing industry is an Ijara fund. More precisely: the Ijara Fund, particularly as the Fund is a lower-risk investment and a perfect addition for diversifying a portfolio”.

The offering period of the Fund is limited and will commence on February 10th and ends on March 26th 2002. Subscription to the Fund is open to all nationalities and the minimum investment amount is US$ 25,000.

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