Pharmaceuticals, energy and utility companies are likely to be the biggest beneficiaries of the expected surge in investment, according to Robert Fleming, the investment management firm.
Fleming plans to launch a fund this week specifically aimed at Britain's 1.5-2 million Muslims. It is expected to have a high entry level at $50,000, although investors could pool their resources.
Fleming's first Islamic fund, Oasis, was set up in February for international investors. Its overall investment policy is set by three eminent Islamic scholars who have screened a list of 2,500 blue-chip companies - based on the Morgan Stanley Capital International World Index - down to fewer than 1,000 potential investments.
The scholars will meet three or four times a year to review the portfolio. Their assurance that investments have met Islamic criteria will be included in the fund's annual report to investors.
The three are members of the jurisprudence academy in Jeddah, Saudi Arabia, which issues rulings, or fatwa, on Islamic law. Fleming says the academy is now taking a more relaxed view of investments in Western companies, although Muslims are still barred from putting money in certain types of business.
Makers of alcoholic drinks and gambling enterprises are ruled out, although arms and tobacco firms are not. Shares in food companies that process pork are banned. So are airlines and hotels, as they are seen to be distributors of alcoholic beverages.
Enterprises such as banks and insurance companies do not make the list because charging interest is regarded as usury - a mortal sin. Companies that have high cash balances and derive large earnings from interest would also be blacklisted.
A devout Muslim is not allowed to hold an interest-bearing bank account, as the Koran says there should be no profit without risk. One consequence of an increased number of Islamic investment avenues would be a reduction in the number of non-interest bearing accounts at the big clearing banks.
The new funds may attract non-Islamic investors, but Westerners could be put off by the "purification" procedure: managers calculate the interest earned by a company on its cash deposits and donate a corresponding amount from the fund to charity so that its investors do not commit mortal sin.
Other international investment funds are also hoping to attract some of the estimated $100bn in Muslim cash thought to be looking for new investment opportunities. Kleinwort Benson, a merchant bank with strong Middle East links, is believed to be close to starting a fund and the investment manager, Gartmore, is reviewing whether to set one up.
One of the first, al Medina Investment Fund, was established about 18 months ago to provide pension and life products to the Islamic community in Britain. Investments are managed by stockbrokers Albert E Sharp. "It is basically an ethical fund with a different code of ethics - where principle is put above profit," said Hugh Hassard, al Medina's independent financial adviser. "There are a vast number of Muslims worldwide who could be attracted to funds like these. There are, for instance, 180 million in Indonesia and 50 million in China."
In the UK, Muslim communities are found mainly in inner-city areas of large conurbations such as London, Bradford, Birmingham, Cardiff and Manchester.