Bank of London and The Middle East, the UK-based Shariah-compliant bank, has lauched a fund targeting institutional and high net worth individuals in Gulf countries seeking higher returns than from the bank’s current US Dollar Income Fund.

The new fund is called the BLME High Yield Fund. It targets a net return of three-month $ Libor (London Interbank Offered Rate) in addition to a 5 per cent return per annum by investing up to 85 per cent in Sukuk (Islamic bonds) and 15 per cent in Ijara (a lease contract on an asset).

The BLME High Yield Fund is an open-ended fund, with a minimum investment of $250,000 with sterling and euro share classes also available. The fund is part of BLME's existing Sharia'a Umbrella Fund SICAV-SIF and is domiciled in Luxembourg. The fund has been launched with $10 million of seed capital.

"This is the second new compartment to be launched under BLME's Sharia'a Umbrella Fund this year and highlights BLME's continued commitment to developing competitive Sharia'a compliant funds across a range of asset classes. We believe that asset management will not only be central to our continued development but also to the future growth of the Islamic finance industry,” said Nigel Denison, head of asset management at BLME.