The global sukuk market has proven itself as an effective measure of some of the fastest-growing economies in the world, while also providing steady cash flow. Unlike traditional fixed income investments, sukuk offer a stake in the underlying assets and pay investors a percentage of profit at predefined regular intervals. Sukuk could be attractive to both Muslim and non-Muslim investors as an alternative to conventional bonds for those looking for diversification options.
As evidenced during the start of the global pandemic in early 2020, the sukuk market witnessed a more muted downturn relative to traditional bond markets and experienced a quick recovery afterward. This resilience during volatile times is often tied to the high-quality nature of issuers and strong credit fundamentals of the underlying sukuk structure.
Despite a small decrease in market size for 2020, the U.S. dollar-denominated sukuk market has experienced a compound annualized growth rate of nearly 20% since 2013, as measured by the Dow Jones Sukuk Total Return Index (ex-Reinvestment) and the S&P Global High Yield Sukuk Index. As capital needs evolve and investor awareness broadens, the global sukuk market is well positioned to build on its current momentum.