NEW YORK, Dec 18 (Reuters) - Standard & Poor's said it will launch on Tuesday versions of its widely used global indexes such as the S&P 500 .SPX, in response to the burgeoning demand for financial products and services that comply with Islamic law, or shariah.
Shariah forbids Muslims from receiving interest payments and from investing in companies involved in the production or sale of pork, alcohol, tobacco, pornography, gambling and non-Islamically structured finance or life insurance.
S&P said its initiative aims to create new opportunities for Islamic investors to benchmark their international investments as well as for asset managers to develop new investment products serving the Islamic community.
The new indexes — the S&P 500 Shariah, S&P Europe 350 Shariah and S&P Japan 500 Shariah — screen shares in the parent indexes that comply with Islamic law.
“Potential growth in shariah-related investing around the world is enormous, but has been held back by a lack of globally accepted benchmarks and other tailored investment tools,” said Alka Banerjee, vice president of S&P’s Index Services in New York.
At the same time, the popularity of ethical funds has increased dramatically over the years, increasing the demand for specialized international benchmarks.
To date, estimated global assets held in shariah-compliant accounts range from $200 billion to $350 billion and are growing about 10 percent to 15 percent per year.
The first known Islamic equity fund was the Amana Income Fund, established in June 1986 by members of the North American Islamic Trust, an Indiana-based organization which oversees the funding of U.S. mosques.