Dow Jones Indexes has partnered with Dharma Investments Ltd, an investment firm, to launch Dow Jones Dharma Indexes, which would comprise stocks that comply with the religious beliefs of Hindus and Buddhists. The measure would make it possible for devout followers of both religions to invest in stocks without compromising religious beliefs.
On Tuesday, the two companies launched four country-specific indexes for the US, UK, Japan and India, and a global index—the Dow Jones Dharma Global Index.
The Dow Jones Dharma India Index will comprise 250 firms that meet the value systems and principles of the two religions, the two partners said. The index will exclude firms that operate in businesses that are not in concurrence with the principles of Hinduism and Buddhism: defence, liquor, gaming, pharmaceuticals, tobacco, supermarkets and broadcasting. Infosys Technologies Ltd, Bharti Airtel Ltd, ICICI Bank Ltd, Larsen and Toubro Ltd (L&T), Housing Development Finance Corp. Ltd (HDFC) are some of the Indian firms that form the Dharma India Index. However, L&T has a growing defence equipment manufacturing business.
“L&T is an entity, which passed our screen test for dharmic principles,” said Sumeet Nihalani, senior director, sales, Asia-Pacific and West Asia, Dow Jones Indexes. “It’s possible that it doesn’t have meaningful exposure to defence. However, during the review process, if we find that any company does not meet our criteria, it may be excluded from the index.”
Until now, Islamic investing has been more popular among faith-based investments. Islamic investing follows Shariah laws, which do not allow Muslims to invest in companies that deal in pork, alcohol, entertainment and gambling. Shariah principles also do not allow investments in companies that have very high exposure to debt or earn an income from interest.
“Till now, faith-based investing has been restricted to Islamic and Christian religions only,” said Nitesh Gor, chief executive of Dharma Investments. “But 20% of the world population consists of dharmic religions such as Hindusim and Buddhism. The idea (of the Dow Jones Dharma Indexes) is to promote faith-based investing through dharmic religion.”
According to Dow Jones, socially responsible investing, of which faith-based investing is a part, has around $4 trillion (Rs157.2 trillion) of assets under management and is growing at 20% a year.
To ensure that only the desired set of firms form part of the Dharma indexes, three boards will monitor?and?advise?Dow?Jones and Dharma. The boards will include academics and followers of the two religions.
Dow Jones Indexes first launched an Islamic Market Index in 1995. In 2007, Standand and Poor’s, an international credit rating agency, launched an Islamic index comprising firms from Brazil, Russia, India and China.
Dow Jones Indexes is part of Dow Jones and Co., which publishes The Wall Street Journal. Mint has an exclusive content partnership in India with WSJ.