Index Award
Almadar Finance & Investment Company, was awarded the 'Best Islamic Index Provider' award by the Banker ME magazine & the Islamic Business & Finance Magazine, during the second Islamic Retail Banking Conference (IRBC II) held in Dubai recently. The other two finalists for the award were the original pioneers of Islamic indices, Dow Jones in the United States and FTSE in the United Kingdom.
The Almadar indices have provided a much need tool to the Islamic asset management community in Kuwait and the wider GCC region. The Almadar indices have also played a pivotal role in shaping the retail investment fund environment in Kuwait during the previous three years. Prior to the establishment of the Almadar’s KTSCI indices in June 2002, there were no Kuwaiti equity Sharia Complaint funds operating in Kuwait. However, since the establishment of the KTSCI indices, Kuwait has seen the establishment of at-least five Sharia Compliant Kuwaiti equity funds and three pure Islamic Kuwaiti equity funds (fund which only invest in companies required by their charter to operate within Sharia guidelines). Similarly, prior to the establishment of the Almadar GCC indices, there were no GCC equity Sharia Compliant equity funds in Kuwait. However, since the establishment of the GCC Sharia Complaint index, Kuwait has seen the establishment of two GCC Sharia Compliant equity Funds.
More interestingly, since the establishment of the Almadar Sharia Compliant indices, most of the local and regional funds established by both the conventional and Islamic financial institutions in Kuwait have been Sharia Compliant and most of them have been using the Almadar indices. The recent change in attitude of the wider investment community in Kuwait and its willingness to embrace Islamic asset management, has been fueled by the successful portrayal by the Almadar indices of the superior returns that can be generated by Sharia Compliant investments compared to conventional investments, with the added advantage of being able to offer the investment / fund to a wider portion of the population; being able to capture both the conventional and Sharia conscious investors.
Almadar presently has a total of thirty Islamic Sharia compliant indices; Twelve for Kuwait, sixteen for the GCC region, one for the MENA region and one for the US markets. Almadar established its first index in June 2002; the Kuwait Sharia Compliant index - Composite, (KTSCI - Composite). The KTSCI - Composite index is a Sharia Compliant index of all the Sharia Compliant companies listed on the Kuwait Stock Exchange (KSE). Of the 151 companies presently listed on the KSE, 81 are Sharia Compliant and are constituents in the KTSCI - Composite index. The KTSCI - Composite index has a total market capitalization of KD 14.5 billion (Sept 05) compared to the total market capitalization of KD 36.1 billion (Sept 05).
The second index Almadar incorporated during the fourth quarter of 2002 was the KTSCI – Active index. The KTSCI - Active is an enhanced index of ten of the most active traded Sharia Compliant companies traded on the KSE. The KTSCI - Active index was established to enable asset managers to offer passive investment opportunities like index tracking funds, and exchange traded funds for Kuwaiti equities.
The other ten Almadar indices for Kuwait are derivative sectorial indices for banking, investment, insurance, real estate, industrial, services, food, companies incorporated in Kuwait (Kuwaiti only), companies not incorporated in Kuwait (non-Kuwaiti), Islamic (only those companies which are required by their charter to operate within Islamic Sharia).
Though the KTSCI indices were established during 2002, however they were back tested for a number of years. Hence, they have a base year of January 1st 1999, and a base value of 100.00.
Almadar also has sixteen indices for the GCC region. The GCC index series has six composite indices, one for the entire region and one for each of the five GCC countries excluding Kuwait. The remaining ten indices in the GCC index series are sectorial indices for the Food, Banks, Basic Material, Building Material, Energy, Insurance, Investment, Industrial, Services, and Real Estate. The GCC indices have a base year of January 2000 for the composite indices and a base year of January 2004 for the sectorial indices.
Almadar has one index for the MENA region which specifically tracks the telecommunication sector in the MENA region. This index was created in 2004 for the Zajil Fund established by National Investment Company, Kuwait.
Lastly, Almadar has one index for the US markets. The US index is a broad market index with 250 constituents from a wide array of sectors and market capitalizations. The index has a market capitalization of USD 6,436 billion, and includes 184 companies from the Standard & Poor 500 index. The US index has a base year of January 1999 and base value of 1000.
The Almadar indices are presently licensed to six different funds (Darij Fund, Zajil Fund, Markaz Islamic Fund, Al-Huda Islamic Fund, IFA Islamic Fund, and Almadar US Index Fund), managed by some of the most respected investment companies in Kuwait, namely; National Investment Company, Kuwait Financial Center, Al-Ahlia Investment, and International Financial Advisors. Moreover, the indices presently have more than $500 million assets under management.
The indices have been successful primarily due to their track record of out-performing the conventional indices, while offering better risk to reward profiles and higher Sharpe ratios.
|
