sensitive assets in the Gulf Cooperation Council (GCC) countries and Asia touched $736 billion in 2008 compared to $267 billion in 2007, said the third annual Ernst & Young Islamic Funds and Investments Report (IFIR) 2009. In a statement Tuesday, Ernst & Young said that in computing the total asset size this year, the report included Awqaf and Endowments, Takaful operators in Malaysia, sovereign wealth funds in the Middle East and North Africa (MENA) and Asia, as well as the markets of Pakistan and Southeast Asia. It said that although the Islamic asset management industry had a potential revenue pool of $3.86 billion, the size of funds remained small with over 50 percent having assets under management of $20 million or less. Ernst & Young also stated that the largest concentration of Islamic funds remained in the Middle East and equity funds led the field of choice of asset type. Saudi Arabia held $19.28 billion in total assets under management for Islamic funds while Malaysia $4.579 billion, it said. “The untapped markets in Asia and MENA are a source of growth for the Islamic funds due to their large Muslim populations. These markets, where Islamic finance is still in its infancy include Indonesia, Pakistan, India, Bangladesh, Turkey, Iran and Nigeria,” it said. Ernst & Young said that the average return from Islamic equity funds fell to minus 39 percent in 2008 compared to a 23 percent return in 2007. In the first quarter of 2009, the average return stood at minus 3.7 percent. On Islamic fixed income funds, the average return dropped from three percent in 2007 to one percent in 2008 and the first quarter of 2009. Meanwhile, Sukuk issuance slowed as spreads widened - Sukuk worth $15.5 billion were issued in 2008 compared to $47.1 billion in 2007. The report estimated that $27.5 billion worth of Sukuk would be issued in 2009. “Last year, we highlighted the phenomenal rate of growth experienced in the Islamic asset management industry. The landscape has changed significantly now, yet the fundamentals of the Islamic fund industry remain strong. “With almost $50 billion in fund assets under management and a large, expanding and untapped Muslim population, there are likely to be considerable opportunities in the future. “This is a time when strategic choices have to be made and market participants have to adapt to survive,” said Ernst&Young Islamic Finance Services Group (IFSG) partner and its head of Assurance Services of Malaysia Abdul Rauf Rashid.