Index provider rolls out benchmarks for the Dharmic religions.
Earlier this month, Dow Jones unveiled an index family designed to meet the investing needs of more than 1 billion people—roughly one-fifth of the world's population.
The Dow Jones Dharma Indexes, developed with Dharma Investments, target members of the Dharmic religions—Hinduism, Buddhism, Jainism and Sikhism.
Indexes that comply with the requirements of Islam and different branches of Christianity have been available for some time. But the Dow Jones Dharma Indexes are a first for these four Eastern religions.
Tracking New Markets
Previously, Dow Jones Indexes was the first major provider to create its own product lineup specifically for Muslims. The Dow Jones Islamic Market Indexes screen companies based on their financial ratios and business activities to ensure that they are acceptable investments according to the tenets of Islam.
While it was not the first faith-based index, the launch in 1999 represented a tipping point for that type of benchmark. Now, most of the major index providers offer Islamic indexes in some form.
The Dow Jones Dharma Indexes are intended to reflect the value system held in common by the Dharmic religions, particularly Buddhism and Hinduism, which have somewhere in the proximity of 350 million and 900 million adherents, respectively.
The term "dharma" means slightly different things to each of these religions, but generally it is a reference to the core principles of the religion. Under the auspices of dharma, as defined by Hinduism, fall two key concepts—nonviolence and stewardship. In Buddhism, dharma encompasses five precepts that can best be summed up as compassion, caring, purity, truth and self-control.
Dow Jones Indexes and Dharma Investments have used these directives as the basis for the index family. The result is five indexes—a global benchmark and four country indexes covering the United States, the United Kingdom, Japan and India. The indexes are monitored continuously and reviewed on a quarterly basis. Components are determined through a series of industry, environmental, corporate governance and qualitative screens established and maintained by a group of committees and advisory groups that are made up of experts in finance and Dharmic religions.
Three boards oversee the quality and construction of the indexes and their methodology. The Dow Jones Dharma Academic Advisory Committee is responsible for the underlying concepts that drive the indexes' creation and construction, which the Dow Jones Dharma Supervisory Board then uses to establish the screening criteria and apply them to Dow Jones Indexes' universe of stocks.
Finally, the Dow Jones Dharma Religious Council blesses and approves the decisions of the other two committees. The three committees are also advised by Oxford Centre for Hindu Studies and Oxford Centre for Buddhist Studies.
Benchmarking On Faith
The screens applied to the indexes eliminate companies that engage in activities that involve unnecessary violence, such as those that engage in animal slaughter or testing, the manufacture and sale of weapons and the production of meat products.
Other screens are targeted at the concept of stewardship and address such things as environmental responsibility and governance. They reward companies that have worked to better the welfare of the world, whether in terms of environmental preservation, sustainability or acting for the good of society, and they exclude companies that have negative impacts in any of these areas.
With almost one-fifth of the world's population belonging to a Dharmic religion, it's hard not to wonder why an index family hasn't cropped up before now. After all, the Dow Jones Islamic Index is going to be celebrating its 10th anniversary in the not-too-distant future.
Whatever the case, Dow Jones Indexes is the first major index provider to tap into a well of potentially tremendous demand. For example, India is one of the most populous countries in the world and one of the world's most watched emerging markets; the majority of its population is Hindu, and it is the home country of most of the world's Sikhs and Jains.
Moreover, its surging economy means that there is a growing amount of investment money, and many of those investors may be in the market for a benchmark or investment framework that complies with their religious beliefs.