During times of economic instability, we tend to feel insecure. We start to question our values and try to change and adapt with the new standards we set for ourselves. We become more transparent, think twice where we spend/ invest our hard earned money, but most importantly we turn to GOD.

In the sudden wake of faith and in the aftermath of the global crisis, the STOXX Limited launched on April the 26^th the first “Christian compliant” index, the STOXX Europe Christian Index. The index is very similar in nature to Shariah compliant indices in that for companies to be listed, they have to pass a set of screens set by Christian Brothers Investment Services (CBIS). The index comprises of 533 European companies selected from the STOXX Europe 600 Index such as BP, HSBC, Nestle, and Vodafone. While the Shariah forbids Muslims from investing in companies involved in production or sale of pork, alcohol, tobacco, pornography, gambling and non-Islamic structured finance or life insurance, the Christian compliant index is somewhat limited as it restricts listing companies who’s revenue is generated from pornography, weapons, tobacco, birth control and gambling.

The index, similar to others, is intended to act as a benchmark for actively managed funds. With only 67 companies excluded from the index, I’m not really sure if performance will deviate much from the Stoxx Europe 600 Index. The graph below shows the 10-year historical returns of the S&P500 Index vs. S&P500 Shariah Index. Over that period, the Shariah Index lagged the S&P500 by 2%. Moreover, when I back tested the returns of the STOXX Europe Christian Index vs. the STOXX Europe Index, the difference was immaterial.

Tags: Europe, STOXX 600, STOXX Europe Christian Index

This entry was posted on Sunday, May 2nd, 2010 at 11:51 pm and is filed under World. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.