Manulife Investment Management ( Manulife IM ) has launched its Manulife Shariah Global REIT Fund in Brunei in partnership with BIBD Securities ( BIBDS ) – a wholly owned subsidiary of Bank Islam Brunei Darussalam ( BIBD ), the country’s largest bank and flagship Islamic financial institution.

The fund, which will be exclusively distributed by BIBDS for two years, invests in Shariah-compliant real estate investment opportunities from across the globe, providing investors in Brunei with potential long-term income and total return from real estate and infrastructure investments. It focuses on real estate investment trust ( Reit ) investment opportunities derived from three key macro growth trends:

• New economy – Increase in demand for specialized and industrial Reits, such as data centres, telecommunication cell towers, logistics and warehouses, as growth and adoption of digital technologies, including artificial intelligence, internet of things, self-driving cars and e-commerce, continues.
• Ageing population – The increasing number of elders globally will see increase in demand for healthcare Reits, such as medical centres and retirement homes.
• Moderating economic growth and pricing power – With global growth expected to moderate, Reits of industries that have pricing power over their products and services due to high demand could potentially perform well. These include data centres, industrial healthcare and tower Reits.

The fund is designed for investors who wish to have investment exposure through a diversified portfolio of Islamic Reits globally, seek regular income and potential capital appreciation over the medium to long-term and prefer Shariah-compliant investments. As of December 31 2023, the annualized distribution yield for the fund was 5.3%. 

Over the past 20 years, global Reits, the companies argue, have outperformed the broader equity market across different economic environments, typically outperforming global equities during periods of high inflation and delivering strong performance during declining interest rate environments.

In addition, Shariah Reits, the companies note, have also delivered higher total returns than conventional Reits, partly attributed to the Shariah screening requirements that limit the companies’ debt-to-equity ratio to 33%. As of March 31, Shariah global Reits, Morningstar and IdealRatings data show, have generated annualized total returns of 9.47%, while global Reits recorded annualized returns of 7.47%.

“While real estate has historically delivered reliable returns and asset appreciation, investing only in bricks and mortar may restrict the variety of real estate assets and potential returns available to investors,” says Hui Jian Koh, Manulife IM’s Singapore CEO. “The fund expands BIBS investors’ access to a broader spectrum of real estate investments, including large-scale infrastructure projects that are typically beyond the reach of individual investors.”