A new and long-awaited Islamic-focused exchange traded fund (ETF) hit the market today in an effort to reach the large population of Muslim investors. This will be the first fund to cater to this market in the United States, which is around 7 million people strong.

The first American ETF to adhere to centuries-old Islamic beliefs about investing and finance began trading today. The Dow Jones Islamic Market International Index Fund (JVS) is provided by new ETF provider Javelin Exchange Traded Funds, or JETS.

The fund seeks to replicate the performance of the Dow Jones Islamic Market (DJIM) Titans 100 Index. The index is composed of 100 companies located outside the United States, comprising some twenty-three countries and exposure to eighteen different trading currencies. The fund will have a gross expense ratio of 0.68%.

To be “Shariah compliant,” the fund will avoid investing in companies involved in gaming, alcohol, weapons production, pork products and other types of entertainment forbidden by Islamic law. Shariah law also objects to borrowing or lending at interest, so financial stocks are reduced as are highly leveraged companies.

Islamic finance rules are said to have originateed with the Prophet Mohammed in the 7th century.

The index’s largest sector weighting as of May 29, 2009, was oil and gas, followed by basic materials, health care, technology and telecommunications. As of that date, the United Kingdom showed the highest country allocation at 21.04% of the index, followed by Canada (10.71%), Japan (9.83%) and France (9.82%).

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.