Barclays Global Investors, via its iShares exchange-traded funds division, has launched three Shari'...
Barclays Global Investors, via its iShares exchange-traded funds division, has launched three Shari'ah-compliant ETFs on the London Stock Exchange.
The funds are based on indices compiled by MSCI and offer exposure to emerging markets, the US and the world. Guidance for building the products and the indices on which they are based came from Barclays' recently created Shari'ah panel of three Islamic scholars.
Unlike conventional MSCI indices, the new iShares have a higher exposure to the energy, materials and technology sectors than the financial sector, due to the Shari'ah screens. Total expense ratios on the funds range from 0.5% for the iShares MSCI USA Islamic fund to 0.85% for the iShares MSCI Emerging Markets Islamic fund.
The funds are diversified, with the US fund providing exposure to the fewest stocks (276) while the iShares MSCI World Islamic fund tracks 793 stocks. iShares anticipates meeting demand from both Muslim and non-Muslim investors.
Rory Tobin, CEO of iShares Europe, said: "Managing investments according to Shari'ah principles is typically time-inefficient for most professional investors since the vast majority of investment decisions need to be pre-approved by Islamic scholars. iShares has now provided a solution to address this issue."
Seeding partners for the initial three Shari'ah ETFs include Citigroup and Susquehanna International Securities.
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An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client