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Johannesburg - The beginning of April saw the launch of South Africa's first sharia-compliant equity-linked exchange-traded fund (ETF) by NewFunds, a joint initiative between Absa Capital and Vunani Capital.
The NewFunds shari'ah top 40 index ETF tracks the FTSE/JSE shari'ah top 40 index. This index is designed to reflect the sharia-compliant companies identified from the top 40 companies listed on the main board of the JSE, as measured by market capitalisation.
The FTSE and the JSE undertake a two-step screening process verified by Yasaar, a research firm which represents sharia principles. This ensures that all companies included in the index are sharia-compliant.
Scholars at Yasaar's research arm represent all major sharia schools of thought, creating a best-practice approach with credibility across all regions of the Islamic world.
The shari'ah top 40 ETF itself has been certified sharia-compliant by Absa Bank's Shari'ah Board. It services an estimated 350 000 to 400 000 Muslim households in South Africa. The potential investment market is estimated to be worth R1.8bn/year.
Nearly 70% of the index is made up of resources, followed by 13% in telecommunications and 10% in oil and gas, with consumer goods and financials making up the rest. Mining giant BHP Billiton leads the weighting with 26%, closely followed by Anglo American with 14%.
- Fin24.com