Edging towards hedge funds

A growing number of hedge fund managers are casting an eye at the Islamic market, keen to attract the billions of dollars in surplus cash resting in bank deposits. But putting together a sharia-compliant hedge fund has so far proved difficult. By Hann Ho

With so much liquidity sloshing around the Middle East banking system, Islamic investors have been looking for alternative ways to put their cash to work. The Islamic bond market has surged over the past year, with issuance expected to top $10 billion this year, compared with $1.9 billion in 2003. But that's still a drop in the ocean compared with the hundreds of billions of dollars resting idly in bank accounts in the Middle East and Asia.

This interest shown by Middle Eastern investors in