DJ Indexes Licenses Islamic Market Index As Underlying For First Islamic ETF

Dow Jones Indexes has licensed its Dow Jones Islamic Market Turkey Index to Family Finans House the largest, noninterest banking service in Turkey as the underlying for an exchange traded fund (ETF). The ETF based on the index is expected

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Dow Jones Indexes has licensed its Dow Jones Islamic Market Turkey Index to Family Finans House-the largest, noninterest banking service in Turkey-as the underlying for an exchange-traded fund (ETF). The ETF based on the index is expected to be launched on the Istanbul Stock Exchange later this year, pending regulatory approval of the Capital Markets Board of Turkey.

The Dow Jones Islamic Market Turkey Index, which is up 20% this year as of Nov. 1, is the first index of Islamic-compliant stocks that will be used anywhere in the world as the underlying for an ETF. It was created for investors who wish to invest according to Islamic investment rules. The index is part of the Dow Jones Islamic Market index series and tracks stocks traded on the Istanbul Stock Exchange that are compatible with Islamic investment guidelines.

“Licensing this index as the underlying for an ETF will give Islamic investors access to the performance of the Turkish market, which presents a well-developed corporate landscape among emerging countries,” said Lars Hamich, managing director of STOXX Ltd., the joint venture that is responsible for Dow Jones Indexes’ business development in Europe, Asia and the Middle East. “We expect interest from Turkish investors who would like to invest according to their needs and religious principles, as well as from international market participants with a large clientele for Islamic investing.”

The index follows a rules-based index methodology consistent with the Dow Jones Islamic Market Index family. The current 15-component index includes all stocks in the Dow Jones Turkey Total Market Index that fulfill the requirements of the Dow Jones Islamic Market Indexes. The Dow Jones Islamic Market Turkey Index is calculated in the local currency, the Turkish lira, and reviewed quarterly in March, June, September and December.

Excluded from the index are stocks of companies in these lines of business: alcohol, tobacco, pork-related products, financial services, defense/weapons, and entertainment. Also excluded are companies that fail any of three financial ratios: total debt divided by trailing 12-month average market capitalization is greater than or equal to 33% or more; cash plus interest-bearing securities divided by trailing 12-month average market capitalization is greater than or equal to 33%; and accounts receivables divided by total assets is greater than or equal to 33% or more.

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