By Martin Morris
International Titans 100 Index will provide exposure to leading Shari'ah-compliant companies outside US.
Dow Jones Indexes announced on Wednesday it has licensed the Dow Jones Islamic Market International Titans 100 Index to Javelin Investment Management, an investment adviser registered with the SEC.The blue-chip index will underlie the first Shari'ah compliant exchange-traded fund listed in the US - the JETS Dow Jones Islamic Market International Index Fund (JVS).
The index measures the stock performance of 100 leading non-US companies that have passed rules-based screens for Shari'ah compliance.
To determine their eligibility firms are screened based on their industry type and their financial ratios.
The US dollar denominated index is free-float market capitalization weighted and each component's weight is capped at 10% of the index to avoid overweight of one single stock.
"The Dow Jones Islamic Market International Titans 100 Index provides market participants around the world with exposure to the 100 leading Shari'ah-compliant companies outside the United States.
''Javelin's decision to select it as the underlying index for the first Shari'ah compliant ETF in the United States enables market participants to complement their existing US portfolios with international coverage," said Michael A. Petronella, president, Dow Jones Indexes.
The index composition is offiically reviewed annually in June, as well as on an ongoing basis to account for corporate actions such as mergers, de-listings or bankruptcies. Year-to-date, it is up 10.34% through June 30, 2009.
There are currently more than 150 licensees with more than $7 billion in assets benchmarked to the Dow Jones Islamic Market Indexes.