Knowing The Wall Street Journal’s penchant for throwing these stories behind the “subscriber only” gate after a while, let me give you the gist of this one: Dubai Opening Hedge Fund to Investors.
Dubai Shariah Asset Management launched a shariah-compliant fund of funds at the beginning of 2009. The fund returned 41% last year. It’s up about 1% through March 28 and is outperforming its peers.
Now DSAM plans to throw open the doors to its fund-of-funds kingdom, and a number of Islamic banks seem genuinely interested.
The DSAM Kauthar Commodity Fund has $260 million in assets and its stable of managers includes BlackRock Inc., Tocqueville Asset Management, Lucas Capital Management LLC and Zweig-DiMenna International Managers Inc. Each invests in commodity company stocks that have been screened to ensure they comply with shariah law, which forbids investing in perceived vices such as gambling or alcohol, and does not allow heavy debt burdens or traditional short selling.
All manner of business-friendly clerics have been called upon to certify that various hedge fund investment techniques are shariah-compliant by issuing fatwas. The message seems to be, shorting is illegal, except when it can make powerful people money, then it’s not. But I’m not a theologian.