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 The writer completed his MBA (Investment Management) from Concordia University and is a CFA Level 3 candidate. He was recently awarded the Islamic Finance Qualification (IFQ) designation. Mobasher has had four articles published in the Journal of Strategic Studies, Bahrain Center for Studies and Research. The first three dealt exclusively with Islamic finance topics namely: Sukuk (see reference link), Islamic Hedge Funds (see reference link) and the impact of the current financial crisis on Islamic banks (see reference link). The last paper dealt with the rise of sovereign wealth funds.


My entry into the research of Islamic finance topics began rather innocuously. The Islamic International Rating Agency (IIRA) where I was interning had received a request from a financial journal based in India seeking information on Islamic bonds (Sukuk). At the time they were the flavor of the month for issuers seeking to diversify their sources of funding and serious investors were somehow intrigued by the risk-adjusted return potential of a new class of alternative investments. I was asked by my superiors to prepare specific responses to their queries and as my investigation of sukuk began I unlocked a mysterious world that had been absent from my MBA classes at Concordia University in Montreal, Canada and from the CFA curriculum.


It was the first time I had come across terms such as Sukuk-Ijara or Musharakah not to mention the various other sukuk structures. The names sounded quite intimidating at first and I decided to print a small booklet of Islamic finance definitions to keep handy for quick consultations. The challenge was not only in understanding the product but in addressing the fundamental source of concern for any investor: risk. The wealth of information available online and within the agency needed to be collated and aggregated properly so as to provide a measured response. After an exhaustive period of fact-checking on sukuk issuance numbers and prospects for market growth I had prepared a decent first draft; worthy I felt of onward distribution.


This paper included an analysis of the various risks borne by a sukuk investor, namely:

i) Rate of return risk (Interest rate risk)
ii) Credit risk
iii) Foreign exchange rate risk
iv) Price/Collateral risk
v) Liquidity risk
vi) Sharia'a compliance risk


This entire experience forced me to consider expanding my research and provide readers with a broader and more meaningful understanding of a concept that remained a mystery to people outside the inner circle of Islamic finance. Prior to my departure to Canada I was fortunate to be introduced to the Editor of the Strategic Studies Journal, Bahrain Centre for Studies & Research who was searching for scholarly work on Islamic finance topics for publication. I promised him a research piece on Islamic bonds and after receiving the necessary approval continued to produce Islamic finance articles for the Strategic Studies Journal whilst completing my graduate studies.


Fortunately the editor had allowed me the freedom to choose my own research topics from where I delved in to Islamic hedge funds and the impact of the global financial crisis on Islamic financial institutions. A related paper on Sovereign Wealth Funds was also prepared given the prevailing interest at the time in the concept of geo-economics. Indeed all the topics I had researched had already received considerable coverage by the financial press enabling me to quickly piece through information and identify the most relevant and critical factors necessary for my analysis.


Moving forward it is likely I will be paying a great deal of attention to Islamic Equity Funds. I would like to delve in to performance attribution and evaluation of the top performing Sharia compliant funds. Indeed I hope to see myself managing my own Islamic fund one day and understanding the whys and how of the Islamic investment processes should certainly be another integral step in reaching that destination.


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