Standard & Poor’s is launching a Shariah compliant version of the S&P/TSX 60, the index provider said Wednesday.

According to Standard & Poor’s, the S&P/TSX 60 Shariah Index is highly correlated to the S&P/TSX 60 Index, and as such provides a comparable investment portfolio while adopting explicit selection criteria defined by Islamic law.

“The S&P/TSX 60 Shariah Index will create new opportunities for Islamic investors to benchmark their Canadian investments, and for asset managers to create new investment products serving the Islamic community. With the launch of this Index, S&P now has Shariah compliant indices in 52 markets,” says Alka Banerjee, vice president of Standard & Poor’s Index Services, said:

The new index excludes businesses that offer products and services that are considered unacceptable according to Shariah law, such as stocks of companies that operate in alcohol, entertainment, financial services, pork-related products, and tobacco, as well as companies whose financial ratios may violate the compliance measure.

All index constituents are evaluated on an ongoing basis to ensure the index maintains strict Shariah compliance, Standard & Poor’s says.

The S&P Shariah Indices are screened by Rating Intelligence Partners, a Kuwait-based consulting company specializing in the Islamic investment market. Ratings Intelligence Partners researchers interface directly with a dedicated Shariah supervisory board. The board is comprised of Islamic scholars whose role is to interpret business issues as well as financial practices and recommend actions in relation to Shariah index management.

The new index complements the existing S&P Shariah family of indices which includes the S&P 500 Shariah, S&P Europe 350 Shariah, S&P Japan 500 Shariah and S&P CNX Nifty Shariah.

IE