The Market for Shariah-Compliant ETFs | ETF Trends

The Shariah-complaint exchange traded fund (ETF) launched recently and is trading on the NYSE Arca platform, giving investors a fresh take on this type of exposure. 

The Dow Jones Islamic Market International Index Fund (JVS) is not a pure play on Islamic companies, as one may assume. It gives broad international investment (ex-U.S.) exposure to companies which it deems to be in compliance with Sharia law, says Chip Hanlon for Red County.

Javelin Investment Management, the fund’s provider, says there are more than seven million Muslims in the United States, and the investment needs of this population are not being met.

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 18 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.

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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.