Mutual funds that cater to Islamic investors have proven popular in Europe and the Middle East and could be poised for success in the United States.

According to International Investor Advisory Group Ltd., an Islamic investment bank in London, there are more than 50 Islamic equity funds worldwide, compared with fewer than 10 before 1995.

Foreign banks have been looking for a piece of the action. London-based Barclays Global Investors, Commerzbank AG of Frankfurt, and Saudi American Bank of Riyadh, Saudi Arabia, are all introducing funds that adhere to Islamic investing laws and will be distributed in Europe and the Middle East.

Islamic mutual funds have made few inroads in the U.S. market. There are only two such funds, compared with a plethora of funds catering to other religious beliefs, particularly Christianity.

That could change.

Brown Brothers Harriman & Co. of New York, Barclays, and Saudi American Bank said they are considering registering their Islamic portfolios for sale in the United States. With an estimated 6.5 million or more Muslims earning an average of $39,700 a year, the United States could represent a big market for Islamic mutual funds.

"We know there's a market" for Islamic funds in the United States, said Anthony J.R. Cook, a senior vice president at Brown Brothers. The New York banking company introduced an Islamic portfolio overseas on July 1, and Mr. Cook said the company is "looking closely" at the U.S. market.

The challenge, Mr. Cook said, is deciding how to distribute the fund. He estimated that one million Muslims in America have sufficient assets and want to invest in accordance with their religion. "The question is how to find them," he said.

Much of the recent growth in Islamic funds has been driven by the February launch of the Dow Jones Islamic market index, which tracks 600 companies that meet Islamic investment criteria. The index provides a benchmark for Islamic portfolios, and 12 firms - including Brown Brothers - have licensed the right to create funds that track the index.

In November, International Investor Advisory Group and FTSE International in London introduced the FTSE Global Islamic Index Series.

Islamic mutual funds follow shariah law, which bans investments in stocks involved in alcohol, tobacco, gambling, pornography, pork products, and national defense weapons. Investing in hotels and airlines that sell alcohol, for instance, would be precluded.

Because the Koran forbids paying or charging interest on money, shariah law also prohibits investment in most financial institutions, as well as companies that have a high debt-to-asset ratio. Permissible sectors include technology, oil, automobiles, and telecommunications.

Religious funds are not new in the United States. According to Wiesenberger in Rockville, Md., a Thomson Financial company, the number of religious funds in the United States has increased to 17, from nine at the end of 1998.

Still, Christians represent a much larger chunk of the U.S. population than Muslims do, and some experts questioned whether a fund targeting such a small segment could be profitable.

"Getting the message out is difficult in the start-up mode," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I. "The primary difficulty that religious orders have is what marketing initiative you're going to utilize."

That problem has dogged the Amana Funds, established in 1986 and probably the only Islamic mutual fund family being sold in the United States. Managed by Saturna Capital Corp. of Bellingham, Wash., the two Amana portfolios total just over $40 million of assets.

"There is a Muslim vanguard that needs to be born," said Phelps McIlvaine, vice president of Saturna Capital.

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