When religious law pays off | FirstRain

When religious law pays off

Our system has been picking up an interesting counter-cyclical trend on an investment approach that has been buffered from the credit crunch recently – Sharia or Islamic compliant investing.

This is a practise that started in Malaysia three decades ago and it has been growing as the assets available have been growing in the Middle Eastern oil rich nations. New funds are being started – like the first of several new sharia-compliant hedge funds being started by Dubai based Millennium . As Reuters reports

The S&P global shariah index returned 3.61 percent in the second quarter, while the equivalent world index fell by 1.49 percent.

Banking stocks have been hammered by the credit crunch and exposure to the U.S. mortgage market. But as Islamic law prohibits the paying of interest, shariah investors — most from Gulf states which are reaping the benefit of record oil prices — cannot hold such stocks and have therefore been immune.