Pomegra
Mashreq Capital aligns its Sukuk and fixed-income funds with Bloomberg indices, targeting globally recognized Islamic finance benchmarks in 2026.
- Mashreq Capital adopts the Bloomberg Global Aggregate USD Sukuk Index as benchmark for its Shariah-compliant Sukuk income fund.
- Three fixed-income funds — covering MENA, global emerging markets, and Islamic finance — are now benchmarked against Bloomberg indices.
- Global Sukuk issuance is forecast at $270–$280 billion for 2026, up from $234.9 billion in 2024.
Lead
Mashreq Capital (DIFC) Limited, the asset management arm of Mashreq Bank PSC, has adopted Bloomberg Fixed Income Indices as benchmarks across its fixed-income fund suite, the Dubai-based firm announced on June 29, 2026. Central to the change, the Mashreq Al Islami Income Fund — its flagship Mashreq Capital Sukuk vehicle — is now anchored to the Bloomberg Sukuk Index in its Global Aggregate USD form, a rules-based gauge covering investment-grade, fixed-rate, USD-denominated Islamic bonds.What Happened
The benchmark adoption spans three funds: the Mashreq MENA Fixed Income Fund, the Mashreq Al Islami Income Fund (Sukuk), and the Mashreq Global Emerging Markets Bond Fund. Each vehicle is now paired with a corresponding Bloomberg index, replacing prior benchmarks with indices Mashreq Capital selected for their superior liquidity coverage, market depth, and alignment with regional portfolio construction priorities.
The Bloomberg Global Aggregate USD Sukuk Index tracks Sukuk across treasury, government-related, corporate, and securitized sectors. Shariah compliance screening is conducted by IdealRatings under standards set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), embedding a standardized eligibility framework into the index's methodology. The index mirrors the architecture of Bloomberg's flagship Global Aggregate Index, with an additional Islamic compliance layer — giving institutional allocators a familiar analytical structure alongside Shariah-screened asset selection.
Mashreq Capital launched the Al Islami Income Fund in 2009, making it one of the longer-running institutional Sukuk vehicles in the UAE. The fund is Shariah Supervisory Board-approved and invests exclusively in Shariah-compliant fixed-income securities, with a mandate to achieve net annual returns exceeding its benchmark.
Strategic Context
The adoption of globally recognized benchmarks addresses a structural gap in Islamic fixed-income management. The absence of standardized, widely accepted performance yardsticks has historically complicated peer comparison, investor due diligence, and cross-border capital flows into Islamic finance products. Bloomberg's Shariah Sukuk index family was developed precisely to close that gap, applying a consistent rules-based framework across the fixed-income universe with Shariah screens layered on top.
For Mashreq Capital, alignment with Bloomberg indices also serves a positioning function. As one of the UAE's established asset managers, the firm operates in a market where sovereign and corporate Sukuk issuance has accelerated as a complement to conventional bond markets — driven by economic diversification programs across the Gulf and rising institutional demand for Shariah-compliant instruments from a broadening international investor base.
Market Context
The global Sukuk market is expanding at pace. Issuance reached $264.8 billion in 2025, up from $234.9 billion in 2024, and is projected to reach $270–$280 billion in 2026. Outstanding Sukuk debt crossed $1 trillion at year-end 2025, reflecting deepening market infrastructure and growing sovereign reliance on Islamic instruments across the GCC, Southeast Asia, and sub-Saharan Africa.
Total Sukuk market value is expected to grow from approximately $1.3 trillion in 2025 to $1.54 trillion in 2026 — a pace exceeding 18% annually. Key drivers include higher GCC government financing needs amid moderating oil revenues, continued Federal Reserve monetary easing that compresses USD borrowing costs, and rising ESG Sukuk volumes, a segment that recorded $6.5 billion in Q3 2025 alone.
The fixed-income funds 2026 environment provides particular tailwinds for Sukuk vehicles. In a moderating rate cycle, investors seeking yield diversification have increasingly looked to Islamic bonds as a differentiated, geopolitically distributed asset class with growing secondary-market liquidity.
Outlook
Mashreq Capital's benchmark shift reflects a broader institutionalization of the global Sukuk market, as regional asset managers align with transparent, globally recognized index standards to attract cross-border capital and simplify performance attribution. With issuance tracking toward a new record and outstanding market value approaching $1.54 trillion, Islamic fixed-income infrastructure continues to deepen. The Bloomberg index adoption positions Mashreq Capital's fund suite for wider distribution and cleaner competitive benchmarking in an asset class that commands growing sovereign, corporate, and ESG-driven demand.
