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DOHA: Qatar Exchange (QE) and Al Rayan Investment yesterday announced the launch of the QE Al Rayan Islamic index. The index, the first of its kind in the region, is based on QE listed stocks of minimum free float size and liquidity that are Shariah compliant.
Set to debut on January 7, 2013, the index is intended to support the creation of Shariah-compliant exchange traded fund (ETF) by Al Rayan Investment and has been issued with a fatwa by its Shariah Board.
A weighting scheme for the index has been customised to ensure both tradability and diversification across individual stocks and sectors. Qualifying stocks are ranked according to liquidity adjusted free float market capitalisation and then a tiered-weighting methodology is applied where fixed allocations are assigned to individual sub-segments of the basket.
The index is total return based, meaning the dividends are reinvested in the index and has been calculated back to January 2007.
‘We are delighted to extend our index development capabilities to esteemed asset managers like Al Rayan Investment. The new index meets the demands of the ETF envisaged by Al Rayan Investment for listing at QE,” said Rashid Al Mansoori, CEO of Qatar Exchange.
In practical terms, the Shariah screening produces a subset of financially healthy companies with strong fundamentals. We’ve also adopted an alternative weighting scheme for the index whereby large caps retain the edge in terms of weight, but small and mid-cap stocks belonging to some of the best performing sectors are still well represented. We believe investors will be very interested in the returns the index has achieved historically. The QE is expected to launch its ETF by the second half of this year, Mansoori added.
Adel Mustafawi, Board Member and Executive Director of Al Rayan Investment, said: “As the first exchange-sponsored Shariah-compliant index in the region, this will accelerate the development of the Islamic asset management industry in Qatar. Considerable emphasis has gone in to making the QE Al Rayan Islamic index an attractive vehicle to access the Qatar growth story.”
Al Rayan Investment has consistently delivered superior investment performance for its clients. Its focus on innovation continues as we hope the regulatory environment will allow us to launch a related ETF later this year, yet another first in Qatar, he said.
On the features of the new index, Mohsin Mujtaba, Director of Products & Market Development, QE, said all stocks in the index are Shariah compliant and review frequency is semi-annual.