Dow Jones Launches New Islamic Market Index

A press release said the blue-chip index will underlie the first Shari’ah compliant exchange-traded fund listed in the U.S.—the JETS Dow Jones Islamic Market International Index Fund (JVS)—available on the New York Stock Exchange July 1.

The Dow Jones Islamic Market International Titans 100 Index measures the stock performance of 100 leading ex-U.S. companies that have passed rules-based screens for Shari’ah compliance. To determine their eligibility for the Dow Jones Islamic Market Indexes, stocks are screened based on their industry type and their financial ratios.

According to the press release, companies engaged in the following lines of business are excluded: alcohol, tobacco, pork-related products, financial services, defense/weapons, and entertainment. Also excluded are companies for which the following financial ratios are 33% or more: debt divided by trailing 12-month average market capitalization; cash plus interest-bearing securities divided by trailing 12-month average market capitalization; and accounts receivables divided by trailing 12-month average market capitalization.

Each component’s weight is capped at 10% of the index to avoid overweight of one single stock. The index composition is reviewed annually in June.