New York based, Dow Jones Indexes, the global index provider and a major provider of Shariah-compliant indexes, has reaffirmed its commitment to the Islamic equity and capital markets industry with the appointment of Tariq Al-Rifai as its new director of Islamic indexes.
Al-Rifai is effectively the replacement for Rushdi Siddiqui, who helped Dow Jones launch its DJ Islamic Market (DJIM) family of Shariah-compliant indexes in 2001 and who recently left the company to head the Islamic finance news service at Thomson Reuters.
Whereas Siddiqui successfully established the DJIM brand in the global Islamic finance industry, operationally the DJIM family of indexes has not really captured the support nor the imagination of the Islamic equity and investment fund industry. There are less then 10 Islamic equity funds off the DJIM indexes, which are all plain vanilla funds. In 2006 the first ever Islamic exchange traded fund (ETF) in the world was launched in Istanbul by BMD Securities on behalf of a local participation bank off the DJIM Turkey Index. Two years later, ValueCap, the investment arm of the Malaysian Finance Ministry, launched a similar ETF off the DJIM Malaysia Index.
Al-Rifai’s appointment is both a major challenge and an opportunity for Dow Jones Indexes and for himself. He is certainly better connected and more knowledgeable about Islamic finance than was Siddiqui when he started out with Dow Jones. This at a time when Dow Jones Indexes is experiencing great competition from the FTSE Indexes which last year launched its family of Shariah-compliant indexes totaling over 80 such indexes. Other resurgent rivals in the Islamic indexes space include Standard & Poor’s and MSCI. The FTSE has similarly added new products in new asset classes including an Islamic ETF launched in 2008 by Daiwa Securities of Japan and listed on the Singapore Stock Exchange.
The challenge is how to leverage the huge reputation and resources of Dow Jones Indexes in the Islamic space especially through the adding of new index products beyond the vanilla offerings. Islamic ETFs, exchange-traded commodities (ETCs), a REIT (Real Estate Investment Trust) Index, mortgage index are some of new areas that DJIM should be exploring seriously. The opportunity is to expand the Dow Jones brand in Islamic finance through a creative restructuring and perhaps updating its mandate. One area that can be reformed is the restructuring of the Dow Jones Shariah Advisory Board which at the last count comprised five members — an excess not even Dow Jones can afford in today’s financially lean times, and which from a Shariah governance and compliance point of view is over the top and superfluous.
“Tariq’s knowledge about Islamic finance and his broad industry relationships will assure that the Dow Jones Islamic Index family continues to be the leader in Islamic indexing. He will reinforce and support Dow Jones Indexes’ commitment to innovative, meaningful and relevant Islamic indexes in the future. The Dow Jones Islamic Market Indexes are unique, were first to market and continue to be the standard of Islamic indexing around the globe,” stressed Michael A. Petronella, president, Dow Jones Indexes.
Al-Rifai will be based in Dubai and will focus on extending the reach of Dow Jones Indexes’ Shariah-compliant index products globally. His key responsibilities, according to the company, will be to work with Dow Jones Indexes institutional clients to identify new business opportunities, develop new Shariah-compliant indexes and work with money managers and educate investors.
Only a few weeks ago Dow Jones Indexes, expanded its DJIM Index universe to include stocks from Saudi Arabia, Argentina, Colombia, Croatia, Lebanon, Mauritius, Nigeria, Peru, Serbia, Tunisia and Ukraine — thus increasing the total number of countries in the DJIM universe to 68 from 57.
