Sharia-compliant indices have mostly outperformed conventional benchmarks this year thanks to their heavy exposure to information technology and healthcare stocks.
The S&P Global BMI Shariah index gained more than 17% between the start of the year and September 27. The performance exceeded the return on S&P Global BMI index, which is not sharia-compliant, by nearly three percentage points.
“Information technology and healthcare, which tend to be overweight in Islamic Indices, have been sector leaders this year,” said Michael Orzano, head of equity indices, S&P Dow Jones Indices. “Financials, which are under-represented in Islamic indices, have experienced some weakness.”
The Middle East region has lagged behind the rest of the globe. The S&P Pan Arab Composite Shariah index has fallen so far this year, due in part to a steep decline in the S&P Qatar index.
Because relatively few IT or healthcare companies are listed in the Middle East, sharia-compliant indices in the region did not achieve the kind of outperformance relative to conventional indices that was seen elsewhere, Orzano said.
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