Eric Meyer

'Many people say to us: I have made a 100% gain in the local stock markets why should I look at your fund?' says Mr. Meyer. 'But what I see in your local markets is a great deal of downside risk in being fully invested.

'Surely it makes sense to take some of that money out of the market and put it in a fund of caution. This is what we have created in our two Islamic funds of hedge funds which will protect capital in a downturn.' So why is it that these Islamic hedge funds of funds will do well?

'Islamic hedge funds have the advantage of not being highly borrowed, unlike many hedge funds. This is one reason for their strength. It is true that borrowing by hedge funds improves return in a bull market but this will also magnify losses in a downturn.

'Islamic hedge funds also avoid financial stocks - for the same Shariah compliance reasons, and this is another important strength in bad times as financial stocks tend to suffer most. We can demonstrate this in recent performance figures.

'In 2002, for example, mutual funds fell by 20% while hedge funds were down by only 6% and bounced upward by 23% in 2003 while mutual funds were still making up losses.'

Mr. Meyer is most vigorous in his selection of hedge fund managers. From a pool of some 8,000 worldwide, he says about 3,000 would be eligible for Shariah compliance, and perhaps 15% hit his performance targets.

'We are looking for the best stock pickers who will outperform, and are very happy with GRT and Gabelli Asset Management in particular.'

Assisted by prominent Shariah scholars and supported by their fatawa, Mr. Meyer has devised the innovative tools and screening methodology that underscores both funds.

His first Shariah compliant fund of hedge funds was Shariah Long/Short Master Fund, Ltd. A second fund, Shariah Market Neutral Master Fund, Ltd., offers an alternative to Murabaha investing and also is in the process of identifying strategic partners.

Shariah Capital has a sophisticated Web-based software engine that provides 'real time portfolio monitoring for Shariah scholars and managers. Mr. Meyer previously was recognized for his success on Wall Street as a single strategy hedge fund manager, as well as for his accomplishments as a mutual fund investment manager and venture capitalist.

'We offer the potential to take a defensive position and protect the downside, and are looking for strategic partners in the Middle East among the local banks with international funds, and major investment institutions and high net worth individuals. Hedge funds are all about diversification.'