Dow Jones Indexes, a leading global index provider, today announced the Dow Jones Islamic Market (DJIM) Titans 100 Index has been licensed for the first time to serve as the basis of an exchange-traded fund (ETF). The ETF, managed by BNP Paribas Asset Management, launched today at the SWX Swiss Exchange.
The DJIM Titans 100 Index is a blue-chip index that tracks the top 100 global companies that comply with Islamic investment guidelines.
“The new ETF reflects growing interest in the area of Islamic finance as well as a heightened overall demand for unique concepts and products in passive investing. The Dow Jones Islamic Market Indexes are a perfect tool for combining faith-based principles and finance in order to capture the performance of the largest 100 Islamic compliant companies globally. This index family is just one example of Dow Jones Indexes’ leadership in producing advanced, innovative benchmarks—market participants may be looking at this area of finance now, but we’ve been there since the beginning,” said Lars Hamich, managing director of STOXX Limited, a joint venture of Dow Jones & Company, Deutsche Boerse and SWX Group that is responsible for Dow Jones Indexes’ business development in Europe, Australia and Africa.
Launched in 1999, the Dow Jones Islamic Market Indexes seeks to measure the global universe of investable equities that pass screens for Shari’ah compliance. The index family includes more than 60 regional, country and industry indexes derived from the flagship Dow Jones Islamic Market World Index. The DJIM Indexes combines Islamic investment principles with Dow Jones Indexes’ objective, transparent and rules-based methodology.
A six-member supervisory board of Islamic scholars also counsels Dow Jones Indexes on the Shari’ah compliance of eligible stocks for the DJIM.
The index universe for the DJIM Indexes is defined as all components in the Dow Jones World Index. To be eligible for the DJIM, stocks are screened based on industry classification and financial ratios. Companies that represent the following businesses—alcohol, pork-related products, entertainment, financial services, defense/weapons and tobacco—are excluded. Also excluded are companies whose total debt divided by trailing 12-month average market capitalization is 33% or more; cash plus interest-bearing securities divided by trailing 12-month average market capitalization is 33% or more; and those whose accounts receivables divided by 12-month average market capitalization is 33% or more.
Companies that pass these criteria are then ranked based on their float-adjusted market capitalization (weighted at 60%), sales/revenue (weighted at 20%) and net profit (weighted at 20%). These three ranks are combined to produce a final rank. The top 50 U.S. companies are included in the DJIM U.S. Titans 50 Index, the top 25 European companies are included in the DJIM Europe 25 Index and the top 25 Asian companies are included in the DJIM Asia/Pacific Titans 25 Index. Together, these three regional indexes make up the composite DJIM Islamic Market Titans 100 Index.
The DJIM Indexes are weighted by float-adjusted market capitalization with each component’s weight capped at 10% of the total free-float market capitalization. The weights are reviewed quarterly; the indexes are reviewed annually in June. More information can be found at http://djindexes.com.
