Thomson Reuters and Crescent Wealth, the Australian Islamic investment manager, have launched an Islamic investment index for Australia to help open up this resource-rich market to Islamic finance investors globally.

The Thomson Reuters Crescent Wealth Islamic Australia Index will cover 143 equities with combined market capitalisation of $160 billion, said the company in a statement.

It is the first benchmark index to screen ASX-listed companies for compliance with Islamic investment principles using Thomson Reuters unique research-based approach.

The index enables investors to benchmark the Australian equities market and therefore provides a powerful tool to those wishing to expand and diversify their investment portfolios in accordance with Islamic principles.

The Shariah screening filters used by the index exclude institutions from conventional financial sector companies with high levels of debt or leverage such as property trusts and other stocks that conflict with Islamic finance principles.

The screening therefore produces a dynamic bias towards resources and energy firms, including blue chip companies such as BHP Billiton and Rio Tinto.

The creation of the index is a key step toward positioning Australia as an attractive destination for global Islamic investment funds and family offices.

It is estimated Islamic banking assets globally now exceed $1 trillion and could reach $4 trillion by 2020, and that there is US$50 billion in managed funds investing in equities according to Islamic principles. 

Rushdi Siddiqui, global head of Islamic finance and OIC countries at Thomson Reuters, said: "Australian markets are stable and have attractive growth fundamentals that Islamic investors are looking for in today’s challenging macro-environment."

"Using the well-documented and objective Shariah screening process, the new co-branded index will highlight these investment opportunities across our terminals by necessarily focusing on many highly-regarded compliant companies with low levels of balance-sheet debt," he remarked.

"It is a powerful new tool for Islamic investors to geographically diversify their portfolios while increasing investment opportunities into an important G-20 country like Australia." he added.

Talal Yassine, managing director of Crescent Wealth, said the new index was a natural fit for Crescent Wealth, as Australia’s first purely Islamic-focused fund manager.

"There is a huge untapped potential to grow Islamic-compliant investment in Australia from investors around the world, in particular in Asia and the Middle East. This index gives these investors a local performance benchmark for the Australian market,” he added.-TradeArabia News Service