Charles Clawson

New Fund to Track the Dow Jones Islamic Index

Allied Asset Advisors recently launched its new Dow Jones Islamic Index Fund in hopes of drawing Muslim and other morally concerned investors.

The fund, which became available June 30, is the first to track the Dow Jones Islamic Market USA Index, which was created by the Dow for investors seeking to adhere to Islamic principles. The Index consists of U.S. common stocks that meet Islamic investment guidelines-no industries centered around alcohol, tobacco, pornography, gambling, defense and banks or companies that derive a substantial amount of interest income or have high debt (the charging of a fee on debt is considered sinful). The Dow retains its own respected Shari`ah (religious) Supervisory Board to set the criteria and review companies for the Index. So far the new fund has drawn over $21 million in assets, all of it from North America.

Rushdi Siddiqui, director of the Dow Jones Islamic Index Group, called the fund long overdue. "The Index has performed well, with a 27.25% average annual return for 1996-1999, compared to 24.22% for the S&P 500 Index and 12.40% for the Russell 2000." The Index currently consists of 233 companies, with an average capitalization of $27.7 billion and a median of $5.7 billion. For further information on the index itself see an earlier article posted on this Web site.

"In the past there was a burdensome amount of research for individuals who want to apply their religious or moral principles to investing," said Omar Haydar, Secretary Treasurer of Allied Asset Advisor Funds. "For example, you might have invested in Kraft Foods when it was okay, but then it's bought out by Phillip Morris. Islamic investing is now much easier. Also, the fund can be regarded as generally socially responsible, as it precludes such industries as tobacco, liquor, pornography, defense and gambling. The principles that the index is based on may be derived from a specific faith, Islam, they are obviously still universal morals."

The minimum investment for the fund is $500, or $250 for IRA accounts. The fund offers a variety of plans and IRA accounts. Returns information, a prospectus, and other information is available through the fund's Web site.

Haydar noted that while the fund was scarcely a month old, so far it seemed to be holding its own against the market. "We're beating the market so far," Haydar reported. "As of yesterday the fund was down .4% since the end of June."