Wealth from investors in the Gulf Cooperation Council region will add more than $70 billion to the so-called addressable Islamic fund universe by 2013, Ernst & Young MENA said Monday. "Growth in 2010 is welcome given the industry's flat performance since 2007. Looking ahead, the challenging times are by no means over," said Ashar Nazim, MENA head of Ernst & Young's Islamic Finance Services. "There are serious concerns about the increasing likelihood of sovereign debt crisis in Europe and a double dip recession in the US. Both these factors will continue to influence conventional and Islamic asset managers through 2012." Global Islamic fund assets under management grew by 7.6 percent to $58 billion in 2010 led by Saudi Arabia, up from $53.9 billion in 2009, the annual Ernst & Young Islamic Funds & Investments Report released Monday at the World Islamic Funds and Capital Markets Conference. The growth was largely due to market performance and partially on a Islamic funds hit $58 billion, but "challenges remain" The market of more than $500 billion for Islamic funds is growing by at least 10 to 15 percent annually, the report said. Assets under management in the Islamic fund industry rose 7.6 percent to $58 billion last year, led by Saudi Arabia. Funds make up 5.6 percent of total assets in the Islamic finance industry, which Ernst & Young estimates was at $1 trillion in 2010. Shariah funds may struggle to boost assets this year and in 2012. The growth, up from $53.9 billion in 2009, was largely due to market performance and partially on account of new money inflows, the report said. Fixed income, commodities and alternatives did well in 2010, which was a record year for Sukuk with issuance of $50 billion. The Islamic funds universe comprises of some 100 fund managers and 800 Islamic funds but represents only 5.6 percent of the $1 trillion Islamic financial services industry, said the report. The report has predicted three top priorities for the industry. The first lies in origination and structuring. Fund managers are faced with limited availability of quality Shariah-compliant assets and fewer products to invest in. Improving levels of investor and industry trust in their brand and track record will favor established and larger players in origination. The second priority is to continue to attract institutional and affluent client fund flows. Overdependence on a few institutional funds that made up two-thirds of the total new funds launched in 2010 is a key structural weakness in Islamic markets in all regions except Malaysia. The third priority for the industry is to increase operational efficiency. The 30 percent fee compression over recent years will force a re-look at the revenue and cost strategy, operating model and most importantly, the risk infrastructure for sustainable growth.