Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
The index series is made up of 96 new Shariah-compliant indices, including the FTSE Shariah Developed Index Series, the FTSE Shariah Emerging Index Series, the FTSE Shariah All-World Index Series, and the FTSE Shariah Multinationals 150 Index.
Constituents of the index series are based on the large- and mid-capitalized stocks in the FTSE Global Equity Index Series. FTSE factors in a stockÆs free-float or shares available to investors when creating and maintaining indices. The screening for Shariah-compliance is done by Yasaar Research.
Yasaar Research is a subsidiary of Yasaar LLC and was specially created to develop the proprietary software stock screening capabilities and other Shariah-based research. Yasaar LLC, which has offices in Dubai and London, is a global Shariah consultancy that offers financial institutional clients Shariah compliance services including reviews of financial product structures and advice on amendments to achieve compliance where possible.
Shariah principles generally preclude investment in businesses such as conventional financial services, alcohol, pork-related products, gambling, leisure and entertainment. Shariah principles also preclude interest-bearing investments and investments in companies with unacceptable levels of debt.
Setting it apart from other Shariah indices, the FTSE Shariah Global Equity Index Series uses asset-based debt screening, which is considered a more conservative approach to Shariah compliance. This ensures that companies do not pass the screening criteria merely due to market place fluctuation.
ôThe growth of the Islamic market is such that the investors have come to demand an availability of choices,ö says Majid Dawood, president of Yasaar Research.
For his part, FTSE CEO Mark Makepeace says the index series will help providers create structured investment products tailored to the global Islamic market.
In July last year, index provider MSCI Barra launched its MSCI Global Islamic Index Series that covers more than 50 developed and emerging countries and more than 50 regions such as the Gulf Cooperation Council countries and Arabian markets.
At the launch of the FTSE Shariah Global Index Series in Dubai, Nasser Al Shaali, CEO of Dubai International Financial Centre (DIFC) Authority, notes that this latest index series widens the appeal and offering of the Islamic Finance industry. Dubai is making a strong push to become a global Islamic capital market centre and the DIFC Authority is among the entities trying to make that happen.
ôWe are building a critical mass in the Islamic Finance sector by creating a global point of reference for regulations, standards and practices,ö Al Shaali says. ôWe will continue to develop frameworks that promote product innovation and advance the development of international financial markets.ö
London-based FTSE has previously launched other Shariah-compliant indices including the FTSE SGX Shariah Index Series in Singapore, the FTSE DIFX Index Series in Dubai and two indices within the FTSE Bursa Malaysia Index Series in Malaysia.
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