FACTOR INVESTING - THURSDAY 14TH JULY 2022 (08:15-11:30) - THE BERKELEY, LONDON Please join us for our annual factor investing breakfast briefing with participation from MSCI, FlexShares ETFs, Tabula and Professor Stefan Zohren, Deputy Director of the Oxford-Man Institute of Quantitative Finance. Please register now if you would like to attend.
Invesco has launched an ETF in Europe providing exposure to developed market equities while screening out companies that do not adhere to Islamic principles.
The ETF provides exposure to developed market equities that comply with Shariah principles.
The Invesco Dow Jones Islamic Global Developed Markets UCITS ETF has been listed on London Stock Exchange (Ticker: IGDA LN) and SIX Swiss Exchange (IGDA SW) in US dollars. It has been introduced with approximately $100 million in assets.
The fund is linked to the Dow Jones Islamic Market Developed Markets Index which selects its constituents from a universe of developed market companies with average daily trading volumes above $20 million.
Screening for Shariah compliance is conducted by Ratings Intelligence Partners, a London/Kuwait-based consultant specializing in the global Islamic investment market, in coordination with a Shariah Supervisory Board of Islamic scholars that interpret business issues related to S&P’s indices.
The methodology examines companies’ business activities and accounting metrics to remove firms considered incompatible with Islamic principles.
The business activity screen excludes companies that derive more than 5% of their revenue from alcohol, gambling, weapons, tobacco, adult entertainment, pork products, credit cards, hotels, cinemas, music, and interest-based loans. The accounting screen removes firms with debt to equity, accounts receivable to equity, or cash to equity ratios above 33%.
As of the end of December, the index contained over 1,600 stocks.
The ETF comes with an expense ratio of 0.40%. Income is accumulated within the portfolio.
Other Shariah-compliant global equity ETFs available in Europe include the $370 million iShares MSCI World Islamic UCITS ETF (ISWD LN), which tracks the MSCI World Islamic Index and comes with an expense ratio of 0.60%, and the $10m Saturna Al-Kawthar Global Focused Equity UCITS ETF (AMAL LN), which is actively managed and costs 0.75%.