Dow Jones is offering a Shariah-compliant version of its RBP 50 index, which ranks stocks according to their estimated future value relative to their current stock price.
RBP, which stands for required business performance, is a measure of probable performance calculated by Transparent Value, a division of the financial services firm Guggenheim Partners.
Since it launched its first Islamic market indices in 1999, Dow Jones has employed its own screening process to determine which firms are Shariah-compliant. Companies are disqualified if their business deals in alcohol, tobacco, pork-related products, conventional financial services or the defence industry. There are also financial limits, for instance neither a company’s debts nor its holdings of interest-bearing securities may exceed a third of its market cap.
Dow Jones says an independent Shariah supervisory board counsels the firm on compliance matters.
The Dow Jones Islamic Market RBP US 50 Index is meant to contain the 50 Shariah-compliant firms most likely to perform well relative to their current price. They are drawn from a universe of the top 90% of US stocks by float-adjusted market cap.
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