ETF Trends
ETF Trends

Shariah-compliant exchange traded funds (ETFs) are an interesting segment of the ETF world. Will they find a market here?

Shariah-complaint indexes give investors exposure to an index based on a screening and selection process, which combines the index design with Islamic principles. Investors are able to access a market segment that is in line with Islamic rules and way of life.

Shariah rules forbid involvement in alcohol, gambling, pornography, abortion, human cloning, conventional banks and insurers and many forms of entertainment.

Nizam Hamid for Khaleej Times reports that these well-defined indexes have been on the market for some time now and have evolved into stable investment products. The first Shariah-compliant ETF launched in January 2007 and was based on a narrow large-cap global index provided by Dow Jones.

JETS Dow Jones (NYSEArca: JVS) was the first Shariah-compliant fund in the United States. The provider could soon have some competition.

Meanwhile, there is a second Shariah-compliant ETF being developed, as ShariahShares is seeking to launch a Shariah-compliant ETF. According to Index Universe, ShariahShares FTSE Developed ex-US Fund will invest in foreign and domestic companies that meet the strict laws of Shariah requirements.

For more stories about Shariah, visit our Shariah category.

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.