Dow Jones Launches Islamic Index

by Phillip Morton, Investors Offshore.com

28 January 2008

Dow Jones Indexes has launched a new index based on the performance of top Malaysia-domiciled companies that pass rules-based screens for Shari’ah compliance.

The Dow Jones Islamic Market Malaysia Titans 25 Index was launched last week, and measures the performance of the top 25 stocks in the Dow Jones Islamic Market Malaysia Index.

The Titans 25 Index is designed to underlie financial products such as exchange-traded funds, structured products and derivatives.

Suggesting that Dow Jones Indexes has been a pioneer in the field of Islamic finance, Michael A. Petronella, president of Dow Jones Indexes commented:

“Since the late 1990s, Dow Jones Indexes has provided the most sophisticated, consistent and representative index series worldwide to capture the performance of companies that comply with Islamic investment principles. The Dow Jones Islamic Market Malaysia Titans 25 Index enables a growing Islamic banking and finance industry to participate in the performance of the top 25 Shari’ah-compliant companies in one of the most rapidly emerging and sought after financial markets in Asia."

The Titans 25 Index is weighted by free float-adjusted market capitalization, and component weights are capped at 20%. As of January 18, 2008 the top five components by free float-adjusted market capitalization were Sime Darby Bhd, IOI Corp. Bhd, DiGi.com Bhd, Kuala Lumpur Kepong Bhd and Gamuda Bhd.

As of December 31, 2007, the Dow Jones Islamic Market Malaysia Titans 25 Index (USD) had gained 176% from its base date, December 31, 2003, in a backtest.

The Dow Jones Islamic Market Malaysia Titans 25 Index is calculated in US Dollar (USD) and Malaysian Ringgit (MYR), and is reviewed quarterly in March, June, September and December.

Launched in 1999, the Dow Jones Islamic Market (DJIM) Indexes is the first-ever index family to measure the global universe of investable equities that pass industry and financial ratio screens for Shari’ah compliance. The index family includes more than 70 regional, country and industry indexes derived from the flagship Dow Jones Islamic Market World Index.

Other indexes in the DJIM index series are the Dow Jones Islamic Market Sustainability Index, which combines Islamic investing principles with sustainability criteria; and Dow Jones Citigroup Sukuk Index, the first index to track Islamic bonds. The DJIM Indexes combine Islamic investment principles with Dow Jones Indexes’ 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 Indexes.

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