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Wed 2 May 2007 05:11 PM

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Shariah compliant indices for MSCI Barra

Index developer MSCI Barra is to launch Shariah compliant versions of all of its indices within the next five months.

Index developer MSCI Barra is to launch Shariah compliant versions of all of its indices within the next five months.

At an event to mark the launch of its Dubai office, Henry Fernandez, president and CEO of MSCI Barra, said: "We're taking our entire global index family and making it Shariah compliant."

There are currently Shariah compliant versions of the MSCI World Index and Emerging Market Index.

Fernandez added: "By October, we hope to launch the rest of the index family."

Shariah compliant versions are created by applying filters to existing indices to remove equities involved with products that are forbidden by Islam, or which use high levels of debt. Dar Al Istithmar, the Shariah advisor to MSCI Barra, has approved the methodology of the MSCI Islamic Index Series.

MSCI Barra has also developed indices for the GCC markets, as well as the MSCI Arabian Markets Index, which includes the GCC countries plus Egypt, Jordan and Morocco. More accurate indices should help investors to know whether the portfolios selected by their fund managers are outperforming the stock markets or merely keeping pace with them.

Khalid Ghayur, chairman, MSCI index policy committee, said: "Are we sure that we are not paying alpha fees to managers for beta performance?"

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