Although the Shariah-compliant investments might outperform or underperform the conventional alternatives over very short time frames, they generate comparable returns to conventional investing over longer periods of time.
The rigorous business and financial screening ensures that Shariah-compliant investments are less exposed to the deleveraging and liquidity concerns.
A case is built that from December 2008 to 2012, Shariah investing grants comparable returns to conventional investments over longer periods, offers greater stability, has embedded risk management, and offers greater transparency and diversification.
The top three sectors of the following indices are
DJIM World: technology, oil and gas, and healthcare
DJIM Asia Pacific: building materials, technology, and industrials
DJIM Global Emerging Markets: oil and gas, basic materials, and technology
Although Islamic investing is based on a more limited investment universe, that universe has sufficient breadth and depth to construct a portfolio of good quality stocks with sufficient liquidity. To illustrate this further, as of 2012, the Dow Jones Islamic Market World Index (DJIM World) has a universe of 2,413 stocks, which is only 35.5 percent of the Dow Jones Global Index of 6,850. However, its market capitalization of USD18.35 trillion constitutes 41.5 percent of the Dow Jones Global Index’s total market capitalization of USD44.12 trillion.
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