The FINANCIAL -- Thomson Reuters and Crescent Wealth, the Australian
Islamic investment manager, have launched an Islamic investment index
for Australia to help open up this resource-rich market to Islamic
finance investors globally, according to Thomson Reuters.
The index enables investors to benchmark the Australian equities market and therefore provides a powerful tool to those wishing to expand and diversify their investment portfolios in accordance with Islamic principles.
The Thomson Reuters Crescent Wealth Islamic Australia Index, covering 143 equities with combined market capitalisation of $160 billion, is the first benchmark index to screen ASX-listed companies for compliance with Islamic investment principles using Thomson Reuters unique research-based approach.
The Shariah screening filters used by the index exclude institutions from conventional financial sector companies with high levels of debt or leverage such as property trusts and other stocks that conflict with Islamic finance principles. The screening therefore produces a dynamic bias towards resources and energy firms, including blue chip companies such as BHP Billiton and Rio Tinto.
The creation of the index is a key step toward positioning Australia as an attractive destination for global Islamic investment funds and family offices. It is estimated Islamic banking assets globally now exceed US$1 trillion and could reach US$4 trillion by 2020, and that there is US$50 billion in managed funds investing in equities according to Islamic principles.
The Thomson Reuters Crescent Wealth index takes a powerful research-based approach to screening, which allows for a better understanding of companies than today’s automated screening. The compliant companies are reviewed on a quarterly basis for continued compliance with Accounting and Auditing Organization for Islamic Financial Institutions standards.
The index uses the same free float, market capitalization weighting methodology as all other Thomson Reuters global equity indices and employs the Thomson Reuters proprietary liquidity filter. This ensures that all index constituents, including those in frontier markets, are liquid and therefore investable.
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